Inventory Management

Inventory Management-Stopping drugs from expiring.

Many hospitals waste dollars by letting products expire on the shelf, or do not “sell” in a normal time. If inventory were changed to dollars and you could see what is on your shelf, I guarantee most practices would be more proactive in watching their inventory.

The goal is for each product to be sold every month. In inventory language, this is called “Turns”. The goal in Veterinary Medicine is to have 12 turns per year on each product, where each product is ordered at the beginning of the month, and sold prior to the clinic paying for it.

In trying to simplify the inventory ordering system to find out what month drug/food/flea/hw product was ordered, my thoughts are demonstrated in the table with different color dots that correspond to when a product was ordered. In a perfect world, the day could be written on the dot.

March Yellow
April Green
May Blue
June Grey
July Red

Many clinics break down inventory week by week. First week of the month with corresponding color and a 1, second week with a 2, and so on. It ultimately gives more control on the turnover of drugs.

In ordering multiple quantities of the same drug, some may want to number the colored dots. If you order 1 dozen bottles of Amoxi drops, by numbering them 1-12, it will tell you how many you are going through in a month. Please keep in mind that every month varies.

It would be very easy to look up and do a visual inspection of what products are moving and what products are sitting on the shelf gathering dust. The reason for the date is, should products arrive in March during the last week of the month and it would have a Yellow sticker. Realistically, the product may not all be sold by April and need to be reordered in May. If only a quick visual is done, than it would appear the product sat on the shelf for 2 months.

One of my practices put the number on the tubes or bottle of medicine. Example-if a clinic ordered 15 bottles of Clavamox, they would number the bottles 1-15. When another order came in, with another 15 bottles, because they are in a different month, they would have a different color.

This system is the start of matching what is on the shelf with what is in the computer. This would be easier (not easy) to print up an on shelf inventory and match it to what is on the shelf.

Another reason that the inventory may be off is due to the mark-ups on inventory or the dispensing fees. If the mark-up is 2 times the product but has a low dispensing fee, the clinic inventory sales will be lower than national average resulting in less profit.

Inventory (medical and supplies) NOT including lab/food should be around 17 to 19% of gross.