There are several important phases of inventory management, but the key to improving your inventory efficiency is to plan your purchases appropriately. There are three aspects we want to focus on:
What does “low” mean for a particular item? Ideally, we want to quantify what “low” means for each item so that it’s clear and we can effectively plan our orders.
Next, we’ll want to have a “flag” or alert when an item is low rather than relying on team members to write down the low items.
Finally, once it’s been determined that an item is low and needs to be ordered, it’s important to forecast how much should be ordered.
To plan your purchases, you’ll want to use previous sales data or information to forecast your practice's future use. It might sound complicated, but it doesn’t have to be! As an example, if you determine that, on average, your practice uses 325 capsules of Cephalexin 500mg each month, you can predict that you’ll likely use a similar 325 capsules next month. This information can be helpful because as you plan your purchases to prepare for the next month, you’ll know how much to purchase.
We can also think about forecasting and purchase planning regarding grocery shopping. If you know that your family eats a bag of apples every week, during your weekly shopping trip, you’ll buy a bag of apples in preparation for the week.
Putting into Practice:
Instead of this:
“If you shake a bottle and it feels low, order it”
Digging through drawers and cabinets and accidentally forgetting to check things
Placing a “whoops” order or calling your rep in a panic
Do this: Plan your order using demand forecasting and order thresholds or reorder points.
To put this into practice, consider: What is currently on the shelf? What medications, pharmaceuticals, and other inventory do you carry? On average, how much do you sell of each item?
Use your practice management system or other inventory software to determine the average quantity sold of each item. This will help you determine your “low” thresholds and how much to purchase at a time.
Identify Flags or Alerts to Set Up:
Flags can be classified into three different categories:
Physical – These are great for hospital supplies, consumables, or other items that are hard to track in the practice management system.
Electronic – These work great for items that are sold (injectables, vaccines, pharmaceuticals, etc.). Low thresholds or reorder levels can be added into many practice management systems, other inventory software, or dispensing cabinets to alert when an item is low.
Manual – This category encompasses several methods: using the “want book,” a Google Doc on each computer's desktop, reordering checklists, utilizing the department leaders for larger practices, or even an Amazon Echo in the treatment area.
With these flags, be curious and explore what might work best for your practice to know when an item is low and needs to be ordered.
Pharmaceuticals, medications, injectables, and other items sold to patients and clients are typically most easily tracked and sold in the practice management system or other inventory software. These electronic systems can help to:
Keep track of the item and the quantity on hand. This will help you identify if any are missing, if there has been theft, or if there have been missed charges.
Flag or alert the inventory manager when an item is running low.
Charge appropriately for the item, including any dispensing or injection fees, item markup, or linking the item to a treatment.
Utilize software reports to monitor profit margins, sales data, inventory value, and more.
Keep track of the inventory value on hand for accounting and tax purposes and monitor overstock and excess inventory.
