Cards on the table: A simpler way to manage inventory

March 5, 2019
April Marklin, DVM

Dr. Marklin received her DVM from University of Tennessee College of Veterinary Medicine in 1989. She practiced as a small animal associate in Tennessee, Virginia and North Carolina and a business owner for 13 years in North Carolina. She is now semi-retired and working as a relief veterinarian and freelance veterinary writer in her hometown of Clarksville, Tennessee.

After labor, inventory costs are the largest expense in a veterinary practice. Here are some tips that may make your inventory process a little more manageable. Plus, printable reorder tags!

“What do you mean we're out? This dog needs that medication now! Who let us run out of it AGAIN?!” Sound familiar? If so, maybe it's time to work on inventory issues at your hospital. There may be no perfect plan for managing practice inventory, but there are ways to make the process more manageable.

Creating tags

Wouldn't it be great if one trusted employee could monitor every pen, pill, sponge and bottle of cleaning fluid in your hospital? And wouldn't it be even nicer if that person also could work full-time as a receptionist, technician and kennel worker? Obviously, most hospitals cannot afford to employ someone simply to monitor and manage inventory, and this person certainly can't work in every department in the hospital at the same time.

One option is to create inventory ordering cards, or tags. Simply make a template on your computer for a page of small tags that include the following information:

Product name

Alternate product name (if applicable)

Product strength (for medications)

Bottle size/count (how many pills)

Order quantity

Manufacturer

Company from which the product was ordered

Click on the image above to download a printable PDF of reorder tags.Print the templated pages (click here for a sample) on heavy paper stock, create a tag for every product in your hospital, and adhere the tags to the products themselves or to the wall beside where the product is kept (mounting putty from an office supply store works great). If you want to keep two bottles of a product on the shelf, rubber band the order tag around both products. When a product is running low, simply pull the tag and put it in box labeled “reorder.”

Ordering inventory

The person who places inventory orders must be familiar with all the supplies needed to run your hospital and all the places throughout the building where these products may be stashed. It is a great idea to train several team members on this task, including veterinarians. That way, the entire staff understands the complexity of the process and the need to always pull order tags when a product is getting low.

I train individual team members to be in charge of ordering for 6-month periods. Spreading the responsibility in this way empowers each team member and also means we won't run low on a product when one staff member is out sick or quits.

Generally, place large orders on Monday afternoons and Wednesdays by 2:00 p.m. But check the reorder box daily and order any high-use or critically low items when they are needed. The person placing the order should verify that each product in the reorder box is truly needed. I train my team to place reorder tags in the reorder box any time they feel a product may be getting low. It is then the responsibility of the person ordering to verify that the product truly is running low and needs to be ordered that day or can be delayed another week or so.

Once an order has been placed, put the reorder tag in another box labeled “ordered.” That way, someone looking to see whether a product has been ordered can simply check that box for the tag instead of interrupting a busy staff member to ask.

 

Getting the best prices

Most practices order inventory quickly from one or two primary distributors without checking prices. We want the best price for our products but don't want to spend a lot of time price checking with each distributor.

One way to get the best prices is to note on the back of the reorder tag the day the product was ordered, the product's price, the number of units ordered and the company you ordered from. Not only does this give a clear gauge of how many units you are going through so you can determine the best number to purchase each time, but it also shows the price you are paying for the product, so a sudden price increase will be obvious. Price shop each product the first time you start using its card, and check prices through multiple distributors as you place your orders each week. If one company is charging more than you last paid time, call another company to check for a lower price before placing your order.          

Checking in new products

Although it's reasonable to ask the person who placed the order to check in the product, I like to assign this task to another staff member in a “checks and balances” system. No one ever wants to believe that employees would steal from them, but it happens. The best way to avoid theft is to assign different people to each job. The person assigned to check in the inventory should do the following:

Verify that the correct number of each product is in the box and matches the inventory sheet.

Remove the reorder tags from the “ordered” box and put the products and tags back on the shelf.

Sign and date the inventory sheet, and place it in a box labeled “for computer entry.”

Entering new inventory and checking client prices

Your practice management software can help track inventory and pricing. Entering arriving inventory into the computer helps ensure that you are not losing money by undercharging clients for those products, so don't skip this important step. If a product's price has increased, you'll know to adjust the client's price as needed for resale.

This job needs to be done by a detail-oriented staff member who understands your pricing strategy. Initial and date the invoice and place it in the file for the person who will reconcile the invoices with the bill.                  

Reconciling invoices and paying bills

When the bill arrives from your distributor, have a staff member check it against all the invoices to ensure that all ordered products were received and that you were billed properly. Staple the individual invoices to the back of the bill, and place that in the file for bills to be paid.

To prevent theft, I believe the owner should pay the bills. It is so easy today to set up online bill-pay, and it should take only about an hour twice a month to pay all the inventory bills. The owner should be able to check month to month to make sure the bills appear reasonable and don't increase dramatically.   

The bottom line

Inventory management will always be a necessary headache, but the primary goals include keeping inventory numbers low without running out of product, making sure we are pricing products correctly, and having the entire staff work together to accomplish this. Not all systems will work for every practice, so find what works best for you and go for it!

Dr. Marklin received her DVM from University of Tennessee College of Veterinary Medicine in 1989. She practiced as a small animal associate in Tennessee, Virginia and North Carolina and a business owner for 13 years in North Carolina. She is now semi-retired and working as a relief veterinarian and freelance veterinary writer in her hometown of Clarksville, Tennessee.