Inventory: Set expectations and an example

With inventory, the practice owner must set the expectations and an example.

How inventory is managed by everyone in the practice will be a reflection of how the owner expects it to be handled.  If the owner permits inventory to reside on open shelves, in unlocked cabinets, or an unlocked room, it sends a message to everyone that the owner doesn't believe that the inventory has much value.  If it had much value, it would be locked up.  This sets a company-wide culture that will yield leakage of inventory at all levels of the practice.  

Inventory will most likely be lost from lack of capture of charges for inventory used in delivering procedures, incorrect pricing policies that undercharge for inventory used or dispensed, and to theft from employees and potentially clients.  To prevent this, the practice owner must set expectations for how inventory will be managed.  They must assign accountability to one person and support that person in their activities to properly manage.  The owner must set an example for others to follow regarding the management of inventory, and they must empower their inventory manager to implement sound inventory controls.

Each week, the inventory manager should meet with the owner or manager to review inventory as a percent of revenue for the previous week, month, and year to date.  The owner/manager should provide a target amount (in dollars) that is the maximum limit of inventory purchases for the week.  That number should be based upon the previous week's revenue.

Set the expectations for how your inventory will be managed, and set an example that matches your expectations.

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