Inventory Management for Veterinary Offices Video

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  • 0:01 Inventory Management
  • 0:32 What Is Inventory?
  • 2:11 Reordering
  • 3:13 Pricing the Products
  • 4:26 Lesson Summary
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Lesson Transcript
Instructor: Artem Cheprasov
In this lesson, we'll take a look at core concepts related to proper inventory management in veterinary medicine as well as some common technical lingo.

Inventory Management

Running a business that sells physical products is tough. The restaurant and produce businesses are great examples of how hard it is to manage inventory that expires or goes bad quickly. Bad inventory management has been the bane of these two industries and will continue to be so. Veterinary medicine may not be as extreme in its need for picture perfect management of inventory, but it is a business sphere that relies on good inventory management nonetheless in order to minimize expenses and maximize revenue.

What Is Inventory?

Inventory is basically a list or stock of merchandise and goods a business holds. In a produce store, inventory can include fruits and vegetables. In a computer store, it may include keyboards and mice. In a veterinary clinic, it will include things like food and medication. All of that is inventory.

In veterinary medicine, inventory costs should be less than 15% of the overall income of a practice. Anything more than that and it may become unsustainable or unprofitable to keep that inventory. This is so for several reasons.

You know how in a produce store fruits and vegetables eventually go bad? Well, if that produce goes bad before it's sold, that presents a loss to the business. In veterinary medicine, inventoried products can be lost if they expire. For instance, if a practice buys too many bags of prescription food, food that isn't sold before expiration, that constitutes a loss to the business and money down the drain. This is why the average shelf life of a product sold in a veterinary practice should not be longer than three months. Anything over three months and the practice will risk losing the product for any number of reasons, such as product expiration and theft.

Theft brings me to my next point. Money can also be lost to shrinkage, an unexplained loss of inventory, such as by way of theft or accidentally throwing out a perfectly good product without noticing it. Profits can also be lost when someone forgets to charge a client for a product that's sold in the clinic or damages a product intentionally or by accident.

Reordering

Consequently, veterinary practices may try to keep as little inventory on hand as possible to avoid all of the possible scenarios of inventory loss we went over. But even then, eventually the stock of inventory will reach what's called a reorder point, the level at which an inventoried item needs to be reordered before completely running out.

Setting the correct reorder point is critical! If there aren't enough goods on hand to meet client demand and patient need, that will drive clients away. Most often, computer systems are responsible for keeping track of inventory and alerting an inventory manager as to when something needs to be reordered. But even then, these systems rely on correct human tallies of inventory at the beginning, end, and throughout the year.

When items are ordered or reordered and received, they need to be checked thoroughly. It's not unheard of for the wrong products or the wrong amount of products to be sent or damaged or expired goods to be delivered.

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