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AAHA National Staff Meeting Web
Conference - The Top 10 Inventory
Secrets of a Successful Veterinary
Practice Revealed
April 11 - 24, 2011
1
The Top 10 Inventory Secrets of a Successful Veterinary Practice Revealed
April 11 – 24, 2011By
Angela Schneider, CVT
AAHA gratefully acknowledges AAHA MARKETLink/MWI Veterinary Supply
for their sponsorship of this webcast.
Panel of Consultants
Angela Schneider, CVT
Presenter
Las Vegas, NV
Mary Brookings, RVT
Inventory Management Consultant
Goldthwaite, TX
Sandy Franzen
Inventory Management Consultant
Nashville, TN
Patrick Hennessey
Inventory Management Consultant
Portland, OR
Mark Smalley
Inventory Management Consultant
Meridian, ID
Jane Kimmes, CVT
AAHA Practice Accreditation Coordinator
AAHA Practice Consultant
Rhonda Sayle, RVT
AAHA Practice Consultant
Southeast Region
Inventory Management
“In years past, inventory was not a “taught” subject, but more of
a “learned” function in our veterinary hospitals. Today,
understanding, learning and managing our inventory are all
essential actions which support our cash flow as well as greatly
affect our bottom line. Observing and following inventory turn
times, cost of products, supply and demand and reduction of
duplication of products all are segments of inventory we now
must be aware of and act upon accordingly. Investing time to
gain knowledge of inventory management strategies is a
priceless pearl to support the financial health of our practices
today.”
-Rhonda Sayle
AAHA National Staff Meeting Web
Conference - The Top 10 Inventory
Secrets of a Successful Veterinary
Practice Revealed
April 11 - 24, 2011
2
10. They have an inventory leader
• Committed Time To Inventory
• Expectations Identified
• Owners/Veterinarians still hands on
10. They have an inventory leader
• Committed Time To Inventory• Expectations Identified
• Owners/Veterinarians still hands on
10. They have an inventory leader
• Committed Time To Inventory
• Expectations Identified• Owners/Veterinarians still hands on
AAHA National Staff Meeting Web
Conference - The Top 10 Inventory
Secrets of a Successful Veterinary
Practice Revealed
April 11 - 24, 2011
3
10. They have an inventory leader
• Committed Time To Inventory
• Expectations Identified
• Owners/Veterinarians still hands on
“The most successful aspect of inventory is to share the plan
with all employees. The inventory manager must be a
leader, organized, and detail oriented, but can only be as
good as those working around them. Once everyone is
involved it is sure to be a success.”
-Mary Brookings
9. They have hospital team involvement
• Inventory is an important part of the culture
• Delegation of responsibilities
• Accountability of capturing charges and opportunities
• Open book management
9. They have hospital team involvement
• Inventory is an important part of the culture• Delegation of responsibilities
• Accountability of capturing charges and opportunities
• Open book management
AAHA National Staff Meeting Web
Conference - The Top 10 Inventory
Secrets of a Successful Veterinary
Practice Revealed
April 11 - 24, 2011
4
9. They have hospital team involvement
• Inventory is an important part of the culture
• Delegation of responsibilities• Accountability of capturing charges and opportunities
• Open book management
9. They have hospital team involvement
• Inventory is an important part of the culture
• Delegation of responsibilities
• Accountability of capturing charges and opportunities
Dr. A loses $100 of product in a month. He has a profit margin of 20%, so his selling price is $125.
How must he recover?
He must sell $500 in product/month to replace that $100 of lost inventory.
• Incorporate Compliance Officer/Auditor
9. They have hospital team involvement
• Inventory is an important part of the culture
• Delegation of responsibilities
• Accountability of capturing charges and opportunities
• Open book management
AAHA National Staff Meeting Web
Conference - The Top 10 Inventory
Secrets of a Successful Veterinary
Practice Revealed
April 11 - 24, 2011
5
8. They measure to manage
Inventory Data Control – Even the most progressive practices struggle
with good data compliance. It is typically a tedious, time-consuming
manual process that requires consistent adherence in order to rely on
the inventory intelligence capabilities of the practice management
system. If compliance is off by just 10% or more, it makes it difficult, if
not risky, to utilize automated resource planning information like re-stock
requirement, par-level vs. usage, and inventory aging reports. When we
can automate the transactional data capture (similar to what ATM’s have
done for banking transactions) and increase this compliance, then we
can trust and utilize with confidence the reporting information to optimize
our inventory cost and associated revenue.
-Patrick Hennessey
8. They measure to manage
• Forecast and identify seasonal products
• ABC analysis performed to identify “A” products
• Prevent having duplicates, identify “C” products
8. They measure to manage
• Forecast and identify seasonal products
• ABC analysis performed to identify “A” products
• Prevent having duplicates, identify “C” products
AAHA National Staff Meeting Web
Conference - The Top 10 Inventory
Secrets of a Successful Veterinary
Practice Revealed
April 11 - 24, 2011
6
8. They measure to manage
• Forecast and identify seasonal products
• ABC analysis performed to identify “A” products
• Prevent having duplicates, identify “C” products
8. They measure to manage
• Forecast and identify seasonal products
• ABC analysis performed to identify “A” products
• Prevent having duplicates, identify “C” products
8. They measure to manage
AAHA National Staff Meeting Web
Conference - The Top 10 Inventory
Secrets of a Successful Veterinary
Practice Revealed
April 11 - 24, 2011
7
7. They build relationships
• Utilize resources available from vendors (E.g. websites)
• Good relationships with rep = forecasting of price changes and backorders
• They know billing terms for effective ordering
• Utilize home delivery options
7. They build relationships
• Utilize resources available from vendors (E.g. websites)
7. They build relationships
• Utilize resources available from vendors (E.g. websites)
AAHA National Staff Meeting Web
Conference - The Top 10 Inventory
Secrets of a Successful Veterinary
Practice Revealed
April 11 - 24, 2011
8
7. They build relationships
• Utilize resources available from vendors (E.g. websites)
• Good relationships with rep = forecasting of price changes and backorders
• They know billing terms for effective ordering
• Utilize home delivery options
7. They build relationships
• Utilize resources available from vendors (E.g. websites)
• Good relationships with rep = forecasting of price changes and backorders
• They know billing terms for effective ordering• Utilize home delivery options
7. They build relationships
• Utilize resources available from vendors (E.g. websites)
• Good relationships with rep = forecasting of price changes and backorders
• They know billing terms for effective ordering
• Utilize home delivery options
AAHA National Staff Meeting Web
Conference - The Top 10 Inventory
Secrets of a Successful Veterinary
Practice Revealed
April 11 - 24, 2011
9
6. They’re hands on
• They track expiration dates
• Monitor prices & COGS
• They communicate with associates and staff on product changes
• Cycle Count
6. They’re hands on
• They track expiration dates
6. They’re hands on
• They track expiration dates
AAHA National Staff Meeting Web
Conference - The Top 10 Inventory
Secrets of a Successful Veterinary
Practice Revealed
April 11 - 24, 2011
10
6. They’re hands on
• They track expiration dates
• Monitor prices & COGS
Indirect Costs•Tax
•Shipping
•Ordering Cost
•Holding Cost
6. They’re hands on
• They track expiration dates
• Monitor prices & COGS
• They communicate with associates and staff on product changes
6. They’re hands on
• They track expiration dates
• Monitor prices & COGS
• They communicate with associates and staff on product changes
AAHA National Staff Meeting Web
Conference - The Top 10 Inventory
Secrets of a Successful Veterinary
Practice Revealed
April 11 - 24, 2011
11
6. They’re hands on
• They track expiration dates
• Monitor prices & COGS
• They communicate with associates and staff on product changes
• Cycle Count
“Cycle counting is the most effective method to improve the
accuracy of inventory by continually measuring it against your
official recordkeeping system. Accurate inventory records allow
a practice to deliver superior customer service and patient care;
which translates into a successful and profitable business.
Inaccurate inventory can be the biggest area of inefficiency and
revenue loss to any business.”
-Sandy Franzen
6. They’re hands on
• They track expiration dates
• Monitor prices & COGS
• They communicate with associates and staff on product changes
• Cycle Count
6. They’re hands on
• They track expiration dates
• Monitor prices & COGS
• They communicate with associates and staff on product changes
• Cycle Count
AAHA National Staff Meeting Web
Conference - The Top 10 Inventory
Secrets of a Successful Veterinary
Practice Revealed
April 11 - 24, 2011
12
5. They’re Compliant
• Up-to-date on DEA news (E.g. CSOS)
• Know their state’s sales and use tax requirements
• They are responsible with filling prescriptions
5. They’re Compliant
• Up-to-date on DEA news (E.g. CSOS)
•CSOS: http://www.deaecom.gov/csosmain.html
•Regulatory Compliance
•What are your scheduled drugs?
•What are your chemical list drugs?
•Record keeping
•Invoices
•Log books
•Biennial Inventory
•Drug Reporting
5. They’re Compliant
• Up-to-date on DEA news (E.g. CSOS)
“Look into utilizing a reverse distributor when disposing of controlled
substances. This is a safe way to return out of date controlled
substances to a government approved company:
http://www.rld.state.nm.us/pharmacy/PDFS/reversedistributor.pdf”
- Jane Kimmes
AAHA National Staff Meeting Web
Conference - The Top 10 Inventory
Secrets of a Successful Veterinary
Practice Revealed
April 11 - 24, 2011
13
5. They’re Compliant
• Up-to-date on DEA news (E.g. CSOS)
• Know their state’s sales and use tax requirements
• They are responsible with filling prescriptions
5. They’re Compliant
• Up-to-date on DEA news (E.g. CSOS)
• Know their state’s sales and use tax requirements
www.avma.org
5. They’re Compliant
• Up-to-date on DEA news (E.g. CSOS)
• Know their state’s sales and use tax requirements
• They are responsible with filling prescriptions
AAHA National Staff Meeting Web
Conference - The Top 10 Inventory
Secrets of a Successful Veterinary
Practice Revealed
April 11 - 24, 2011
14
5. They’re Compliant
• Up-to-date on DEA news (E.g. CSOS)
• Know their state’s sales and use tax requirements
• They are responsible with filling prescriptions
6 Rights to Medication Administration•Right Patient
•Right Drug
•Right Dose
•Right Route
•Right Time
•Right Documentation
4. They’re Organized
• They map out where products are kept in hospital (zones)
• They implement a central storage
• They limit the number of areas where products and supplies are kept
4. They’re Organized
• They map out where products are kept in hospital (zones)
• They implement a central storage
• They limit the number of areas where products and supplies are kept
AAHA National Staff Meeting Web
Conference - The Top 10 Inventory
Secrets of a Successful Veterinary
Practice Revealed
April 11 - 24, 2011
15
4. They’re Organized
• They map out where products are kept in hospital (zones)
4. They’re Organized
• They map out where products are kept in hospital (zones)
• They implement a central storage
• They limit the number of areas where products and supplies are kept
4. They’re Organized
• They map out where products are kept in hospital (zones)
• They implement a central storage
• 2 Bin System
• Underutilized Room/Closet
• Cabinets
AAHA National Staff Meeting Web
Conference - The Top 10 Inventory
Secrets of a Successful Veterinary
Practice Revealed
April 11 - 24, 2011
16
4. They’re Organized
• They map out where products are kept in hospital (zones)
• They implement a central storage
• They limit the number of areas where products and supplies are kept
4. They’re Organized
• They map out where products are kept in hospital (zones)
• They implement a central storage
• They limit the number of areas where products and supplies are kept
• Cupboard Doors?
3. They order systematically
• They set reorder points and quantities
• They limit the number of times they order and the number of vendors they order from
AAHA National Staff Meeting Web
Conference - The Top 10 Inventory
Secrets of a Successful Veterinary
Practice Revealed
April 11 - 24, 2011
17
3. They order systematically
• They set reorder points and quantities
• They limit the number of times they order and the number of vendors they order from
3. They order systematically
• They set reorder points and quantities
• Identify Turn over goals
3. They order systematically
• They set reorder points and quantities
• They limit the number of times they order and the number of vendors they order from
AAHA National Staff Meeting Web
Conference - The Top 10 Inventory
Secrets of a Successful Veterinary
Practice Revealed
April 11 - 24, 2011
18
2. They’re hi & lo tech
• They utilize their practice management software
• They implement automation
• Lo tech communication tools (E.g. reorder tags & want books)
2. They’re hi & lo tech
• They utilize their practice management software
• They implement automation
• Lo tech communication tools (E.g. reorder tags & want books)
2. They’re hi & lo tech
Determine Need to
order Decide how much to order and from
who
Place Order
Order is received
Contents of shipped
items are verified
against P.O.
Items are recorded
into system and put away
Items are priced
for resale
Items are used
AAHA National Staff Meeting Web
Conference - The Top 10 Inventory
Secrets of a Successful Veterinary
Practice Revealed
April 11 - 24, 2011
19
2. They’re hi & lo tech
• They utilize their practice management software
• They implement automation
• Lo tech communication tools (E.g. reorder tags & want books)
2. They’re hi & lo tech
• They utilize their practice management software
• They implement automation
2. They’re hi & lo tech
• They utilize their practice management software
• They implement automation
• Lo tech communication tools (E.g. reorder tags & want books)
AAHA National Staff Meeting Web
Conference - The Top 10 Inventory
Secrets of a Successful Veterinary
Practice Revealed
April 11 - 24, 2011
20
2. They’re hi & lo tech
• They utilize their practice management software
• They implement automation
• Lo tech communication tools (E.g. reorder tags & want books)
1. They incorporate a budget
• Introduce Benchmarks
• Budgets done based on prior week, month and year revenue
• They have an open book of COGS with hospital team
Is the sundry jar half empty or half full?
1. They incorporate a budget
• Introduce Benchmarks
• Budgets done based on prior week, month and year revenue
• They have an open book of COGS with hospital team
AAHA National Staff Meeting Web
Conference - The Top 10 Inventory
Secrets of a Successful Veterinary
Practice Revealed
April 11 - 24, 2011
21
1. They incorporate a budget
• Introduce Benchmarks
• Be familiar with your Chart of Accounts
1. They incorporate a budget
• Introduce Benchmarks
• Be familiar with your Chart of Accounts
• Financial & Productivity Pulsepoints, Sixth Edition
1. They incorporate a budget
• Introduce AAHA benchmarks
• Budgets done based on prior week, month and year revenue
• They have an open book of COGS with hospital team
AAHA National Staff Meeting Web
Conference - The Top 10 Inventory
Secrets of a Successful Veterinary
Practice Revealed
April 11 - 24, 2011
22
1. They incorporate a budget
• Introduce AAHA benchmarks
• Budgets done based on prior week, month and year revenue
• They have an open book of COGS with hospital team
“Budgeting is an important part of business management. Inventory
and personnel represent the two largest expenses veterinary clinics
have in the business environment. Inventory is a large expense since
clinics usually have more on hand than they can sell. This ensures
they do not run out of inventory. Focusing in on purchasing decisions
will require the use of inventory budgets to make a decision. Budgets
may be created for each type of product purchased by the clinic or
for specific purchasing seasons.. Budgets also help new purchasing
managers make better decisions regarding which products they
choose to purchase.”
-Mark Smalley
Thank You!
Questions
How do we get our inventory situation under control
if I don’t have time, or the involvement from others
in the hospital?
“Our inventory has improved, only because we’ve
made it a priority, that includes the doctors. We’ve
gotten some great reports which show us our ABC
products. We’ve pared down a lot of things we don’t
use and we don’t sell.” Dianne, Kitsap Veterinary Hospital
AAHA National Staff Meeting Web
Conference - The Top 10 Inventory
Secrets of a Successful Veterinary
Practice Revealed
April 11 - 24, 2011
23
Questions
I want to be successful with my inventory, but where
should I start?
“We found that when we wanted to organize our inventory everything we needed was
already here. We started cleaning out closets, cabinets, removing doors and
eliminating shelves and cabinets. Before we knew it we had productive open spaces
that we could really start organizing. We had a large closet that had nothing of worth in
it that we made into a central storage, which everyone had to actually check inventory
out before removing. We moved our pharmacy to a central location to make it easier
to fill prescriptions and see what we had on hand at a glance. The treatment area was
cleaned and organized to limit overstocking. Overstock is now in central storage to
avoid over ordering because you couldn't see anything. Once you start cleaning out
cabinets and drawers, you won't believe have much space you really have. I believe a
central storage is the key.” Linda Hutchins, El Cajon Valley Veterinary Hospital
Questions
How do others utilize their practice management
software programs? And, how are they using their
programs for “in-clinic” used items?
“Our practice management software helps us better control our inventory on hand.
The software allows us to sort our inventory by class for monthly cycle counts,
track expiration dates, view quantities on hand, create and receive purchase orders
as well as keeping track of inventory in several locations in our clinic.”
“We utilize a central storage system that is integrated with in our inventory
management software which gives us the opportunity to keep a close count on the
"white" goods and office supplies which are sometimes forgotten in veterinary
clinics as being apart of their inventory on hand.” Chrissy, Wauwatosa Veterinary Clinic
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AAHA National Staff Meeting Web
Conference - The Top 10 Inventory
Secrets of a Successful Veterinary
Practice Revealed
April 11 - 24, 2011
24
Questions to the Speakers
Please email your questions to [email protected] by Sunday, May 1, 2011.
Angela will provide written responses to all of the questions and they will be posted on AAHA’s website by Friday, May 13, 2011.
AAHA gratefully acknowledges AAHA MARKETLink/MWI Veterinary Supply
for their sponsorship of this webcast.