Inventory Management for Veterinary Clinics
23 December 2018

Inventory Management for Veterinary Clinics


Inventory in plane and simple terms is the term given to the goods and materials that a business holds for sale to customer in near future. In general business also, inventory is one of the most expensive assets and if not managed properly, business is set to lose. Veterinary practice is no different and has equal importance of inventory if not more. In a typical veterinary clinic or hospital, inventory will comprise of Drugs, Ointments, Consumable clinic supplies, Pet food, OTC products like shampoo, Collars, etc.

Reasons why inventory management is important for Veterinary Clinics:

Reasons why inventory management is important for Veterinary Clinics

#1 Impact On Revenue

From purely a revenue perspective, inventory sales constitute more than 20% of the overall revenue generated by the clinic or hospital. If the inventory is not managed well and the customer does not find what he needs at the clinic or hospital, there are good chances that he or she will switch to an alternative. Lack of Inventory will lead to miss sales and missed sales will lead to missed profits.

Various statistics show that more than 15% of the capital invested is in the form of inventories, it is a high cost and if the levels are kept abnormally high, it might have a clear impact on the bottom line.

#2 Impact on Direct Cost

Inventory is one of the major components of working capital. If not controlled, and keeping other things constant, an increase in inventory will lead to high working capital means more capital being blocked and not being put in operational use. Various statistics show that more than 15% of the capital invested is in the form of inventories, it is a high cost and if the levels are kept abnormally high, it might have a clear impact on the bottom line.

#3 Impact on Indirect cost

From a clinic or hospital’s perspective, inventory will have an indirect cost burden also. Indirect costs can be the risks of medicines going obsolete, pilferage, and storage, insurance costs. Too high inventory will lead to high indirect costs as well for veterinarians.

#4 Impact on Practice Value

In case a customer switches to other clinic due to unavailability of inventory, the chances are decent that he is not going to come back forever. This will have a far fetched impact in the sense that overall value from the customer will decrease and will have an impact on the brand perception of the clinic or hospital also.

What all activities come in Inventory Management for Veterinary practice

Having understood the importance of Inventory Management, it is also important to know what all activities comes in Inventory Management for clinics or hospitals so that the strategy and effort can be put in the focused areas:
  • Managing optimum stock levels of inventory items.
  • Priority ordering based on the different parameters like the turnover rate of items, the dollar value of the item etc
  • Defining and fine-tuning the re-order quantity based on forecasted demand and historic usage.
  • Handling of the expired items on time to avoid expiry related costs.

Getting better at Inventory Management for Veterinary Clinics

getting better at inventory management for veterinary clinics Now that we have an idea about the impact of Inventory, what comes under Inventory, it is important to know how to deal with this important aspect and how to get better at it.

#1 Have a good Inventory Manager on Board

Depending on the practice size, it is imperative to have a good inventory manager. Considering the financial implications of Inventory management, it is worth investing on a dedicated inventory manager who (or his/her team) will take care of all strategies and execution of Inventory Management. It is to be understood that the inventory manager will work in close conjunction with the practice manager.

#2 Monitor the inventory prices to ensure right markup

With prices being dependent on several factors, which might change, daily, it is important to keep a track of inventory prices while ordering. This would help practices to keep the markup at the right value to ensure that the eventual business does not result in a loss.

#3 Regularly check the computerized records of the Inventory Management System

With technological solutions in place, it is easy to get the computerized records without spending a major effort. It is recommended that one does a monthly checking of these records to get an idea about the Minimum and Maximum levels reached which will serve as great inputs for the re-order quantity next time a particular item goes out of stock.

#4 Checking the inventory manually at the end of fiscal year

It is recommended that clinics and hospitals do a manual check of the inventory at the end of fiscal year. It serves multiple purposes like
  • It helps them to put a more accurate value of the inventory on books
  • It helps the practice to know the pilferage, expiry or other operational impacts on inventory
  • It helps the inventory manager to know the minimum and maximum value over a long horizon, which can help them to do a better long term plan.
  • #5 Getting the right re-order

    Inventory replenishment is a challenging task for a practice since either the re- order quantity goes haywire or the order gets delayed. It is important for inventory and practice managers to analyse the historical data well and forecast the demand accurately to ensure right re-order quantity and also consider the lead time for the order to fulfill. Else, even though the quantity is right, it might get filled up late and have adverse impacts.

    #6 Have Technology in place

    Having barcode scanners, inventory management systems etc. can prove to be lifesaver in this tight situation. Research says that it remains one of the most un-utilized modules in the veterinary computer programs even though the benefits are immense. It helps one to have a constant control over inventory, generate order (and re- order) lists, reduces in-accuracies to name a few benefits.

    #7 Develop Standard Operating Procedures

    Inventory will have constant interaction with the veterinarians and the staff. In the absence of Standard operating procedures, managing inventory will become a nightmare. It is advised that the inventory manager created standard operating procedures to handle the inventory, which is followed by the whole practice.

    In conclusion, the importance of Inventory management is well understood, still inventory management is one of the most under practiced task in a clinic. If a Veterinarian cannot engage in all the above-mentioned points, it is suggested to start with some of the basic points and move on gradually. With Inventory management having such high impact on the financials, not managing it will have a huge dent on the books.



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