When was the last time you dusted off your inventory shelves, emptied cabinets, and cleaned up your practice information management system (PIMS)? If it’s been a while, there’s no time like the present to tidy up. Organizing and consolidating inventory is one of my favorite things to do—the outcome can be rewarding both visually and financially.
Turnover rates, reorder quantities, and reorder points
Spring cleaning inventory checklist
- Run and analyze turnover reports on all inventory items you sell.
- Clean up reorder quantities.
- Identify what you can consolidate.
- Check expiration dates on all inventory (including in-house items such as blood tubes, sutures, etc).
While it can be time-consuming, determining the turnover rate for all inventories is extremely beneficial. You can accomplish this by analyzing the sales history for each item. Some PIMS can produce turnover reports, making the process much more efficient. Based on your ABC analysis, your A products (top 20% of inventory items) should turn a minimum of 12 times, B products slightly less frequently, and C products significantly less. Use your turnover data to clean up your reorder quantities and points.
Determining correct reorder quantities builds the foundation for your turnover rate. Order too much and a product will sit on your shelf, too low and you will run out. There are a few ways to determine reorder points. I prefer to take an average of how much product we sell in 1 week and order for the month, with 1 week added in for lead time.
Additionally, reorder points alert you to restock an item. You should not order inventory every day(and if you do, these tips will help you), but rather every 3 to 7 days, for example. I use 1 week as a reorder point based on my average weekly sales.
Consolidating products
In the past, we’ve had a few products on our shelves that were repetitive: multiple brands of ear medications, eye medications, and—you guessed it—parasiticides. We were able to quickly consolidate the ear and eye products, but the parasiticides took more time to conquer.