Where do I begin? This is a frequent question asked by practice owners who know they need to address their inventory costs, but who don't know how to begin. Let's discuss 5 actions that will provide immediate impact.
1) Lock your pharmacy. Secure your inventory no matter where it resides. This is an absolute must! Without secure inventory, shrinkage will continue unabated, because noone will take you seriously if you don't take the steps needed to secure your inventory.
2) Reduce duplicates. Many practices allow their doctors to order whatever they want under the assumption that they will only order what they 'need'. This isn't true. Most often, various doctors have a preferred product, one that they have used and are comfortable with. This doesn't mean that other products won't perform similarly, but perhaps they don't see the need to acquaint themselves with a different product. Duplicate products cause significant loss as you are not able to take advantage of volume purchasing, your staff must process many more orders, and expired product will also escalate. Simplify your inventory by reducing duplicate products.
3) Check your pricing strategy. Make sure that you are pricing based up regular wholesale price, not a discounted price, as if you are, as Dr. Clark has aptly pointed out, you will be bleeding profit, and as a result, your inventory as a percent of revenue will be elevated as well.
4) Categorize your inventory items as A, B, or C. 'A' items are those you use in highest quantity and cannot do without. They include the very expensive, high-demand products that might be prone to disappearing from your shelves inappropriately. Begin your new control measures by focusing your efforts on these 'A' products. Some practices that struggle with locking their pharmacy begin by securinging only their 'A' products, as this will help establish your new culture and secure your most vulnerable products.
5) Identify and empower one person to implement your inventory control protocols, and support them completely! Establish a new culture in your practice that teaches improved focus on inventory management to acheive better profitability, which will yield better medicine, better equipment and facilities, and better pay for your staff. Empower your team to keep inventory purchases below a weekly goal that is based upon a percentage of last week's revenue. This stated goal will provide clarity to your team about what is appropriate and achievable.
Establish your culture of responsibility by taking these 5 steps immediately!
