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Veterinarian Technician March 2009 (Vol 30, No 3)

Management Matters — Taking Stock of Your Inventory

by Katherine Dobbs, RVT, CVPM, PHR, Angela Aisbet, CVT

    The "stuff" that takes up space in your practice represents a large expense: the money spent to purchase the goods, the paycheck issued to the staff member who places the order and organizes the supplies, the overhead cost of the space to store the goods and the insurance to protect everything against damage and theft.

    Purchasing

    Because prices are generally competitive among vendors, it may be cost-effective to limit the number of vendors used so that the time spent checking product prices and placing orders is minimal. When comparing vendors with access to the same items, consider rewarding the one that provides good customer service, ships items on time with minimal mistakes and offers additional services that can help the practice save time and money.

    Take advantage of online ordering options to avoid having to track down sales representatives by phone. Also limit the number of orders placed each week and keep supplies organized so it is easy to determine what is needed. Balancing inventory is a constant challenge because there is a fine line between shortages and having too much. Try to have only a 2- to 3-week supply of products on hand, and let them sit on the shelf no longer than 30 to 45 days. Doing so necessitates establishing reordering points and generating frequent reports to monitor the stock on hand.

    Storage

    There are two basic methods for organizing inventory: creating central storage or organizing zones.

    When creating a location for central storage, one large designated room or large locked cabinets can serve as the "store" for the practice. All areas of the hospital should be stocked from the central location, and staff should have limited access to this area. Rather than counting every needle and syringe, keep track of disposable items by unopened box or roll in the storage area. When a box or package of items is distributed to another part of the clinic, consider them "used" when counting inventory.

    Adapting "zones" throughout the facility can help designate where products and supplies are kept. Document these "zones" or locations by room, shelf or drawer, then specify the location (i.e., top to bottom, left to right). Create a map of the zones for the team to use as reference.

    Monitoring

    Monitoring can appear to be an overwhelming task, so begin with an analysis of inventory according to the 80/20 rule, which states that 20% of the inventory accounts for 80% of sales or use. The top 20% of items, therefore, should be given first and highest priority, although the remaining 80% should not be ignored.

    When your list of items is categorized according to the top 20%, you can use the ABC method to set up your inventory duties. The top 20% of these items are classified as "A," the next 30% are "B" and the remaining 50% are "C."

    Assigning a Leader

    Managing the inventory of a larger practice can be a full-time job, and even in a small practice, many hours are needed to do the job correctly. Designating an inventory manager can help ensure that the best practices are consistently followed. The inventory manager should be a highly motivated employee who has an aptitude for mapping out and completing projects — preferably someone who likes organization and numbers. The inventory manager should be given a job description of inventory duties, as well as a written standard operating procedure, so that others can step in when needed during vacations and other absences. The inventory manager also should be educated in inventory concepts to help the practice invest wisely and to reduce expenses.

    Team Involvement

    It is important that the entire team has an appreciation of the investment that inventory represents. One fun way to get the team on board is to create games that require everyone to guess the cost of goods sold (COGS) for various items. The COGS isn't just the price a practice pays for an item but includes the indirect costs associated with purchasing, receiving and maintaining each item. Educating staff can increase their awareness of the value of inventory and the importance of controlling it.

    For examples of inventory management, visit see the web exclusives.

    NEXT: No Pain, Plenty of Gain

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