Consolidation and competition at all levels of the veterinary industry are reducing margins for all stakeholders. When you are forced to accept smaller margins in your business due to competitive pressures, it is even more important to manage inventory wisely. A point or two of profit margin can be the difference between making money that allows you to practice quality medicine and having to reduce the quality of care your clinic provides.
Therefore, for the coming year, ensure that you have done the following in an effort to do even better at managing your inventory:
- Lock your pharmacy. If you are not able to do so, then at least establish a locked cabinet or closet in which you will secure your most expensive products. Start small and you will see results.
- Establish inventory management as a priority, identify and empower someone on your team to take charge of this area. Get appropriate training for them, and support them in what needs to be done.
- Set weekly limits on inventory purchases based upon a percentage of last week's revenues. Support your inventory manager in limiting inventory purchases to these calculated levels.
- Ensure that someone in your practice reviews medical records to capture charges for procedures, products, lab and radiology services to improve (reduce) your cost of professional services as a percent of revenue. The more revenue you capture, the smaller your COPS as a percentage of revenue.
These steps are just a start, but if you implement them, you will see results. Once you see results, your excitement can lead you to more aggressive measures to reduce your inventory and related costs even more. Start small, be persistent, and embark on a path to learn to manage inventory even better.
