Inventory and related costs represent the second highest cost in most practices. Therefore, failure to properly manage inventory can drastically reduce profitability and practice value. With all of the major changes in the veterinary industry including consolidation and some vertical integration, is it possible that we'll see vendor-managed inventory in the near future?
In the human pharmacy industry, vendor-managed inventory has been in place for years. The distributor has had real-time access to inventory levels in hospital pharmacies. This permits the distributor to work with the hospital to set optimal inventory levels and to replenish supply levels immediately when inventory is utilized.
This capability could help practices transfer some inventory management responsibilities to their more experienced distributor partner. It might also affect the time at which the practice purchases inventory. Perhaps the practice shouldn't purchase inventory until it's used? This closer integration and working relationship between supplier and practice could improve efficiencies, reduce inventory costs, improve cash flow and increase practice value.
Vendor-managed inventory might hold some advantages for veterinary practices in the future!