5 ways to improve your veterinary practice inventory

by By Nicole Clausen, CSSGB, CCFP

14 min read

My first day as an inventory manager seems like many lifetimes ago, but I remember it like it was yesterday. I was brand new to the veterinary practice and had never managed inventory before. Standing in front of the pharmacy shelves, I asked how I would know when I should order something. The answer: “Shake a bottle and when it feels low, order it.”

What does that even mean? I wondered. What’s considered “low”?

I’m an analytical person who likes to base my decisions on data, so I couldn’t quite wrap my head around what that meant.

Now that I’ve been an inventory consultant in vet med for almost 5 years, I’ve heard from countless others who received the same “training.”

Managing inventory in a veterinary practice seems to be a common struggle, whether you’re a one-doctor rural practice or a specialty/emergency facility with 50+ veterinarians.

Over the last several years, it has become increasingly apparent that a streamlined veterinary inventory strategy is not only helpful — it’s necessary. As the labor shortage continues to plague the industry, the less time you spend on inventory, the more time you’ll have for your patients.

5 ways to improve your veterinary practice inventory

1. Set up (or recalculate) reorder points

First things first: A reorder point is the stock level at which a product would be ordered. It’s a “flag” that lets you know when an item is running low. The corresponding reorder quantity is how much you would order when you are running low. A reorder point is essentially “low” quantified. So, rather than shaking a bottle to feel if it’s low, now we have a quantifiable number.

Setting up reorder points can be incredibly beneficial because you can lean on other methods rather than waiting for someone to “write it on the list” or going around every Monday and inspecting everything in your inventory to see if it’s low. Utilizing reorder points is a more proactive and efficient way of managing your inventory.

I always recommend calculating reorder points based on how much you are actually using or selling, rather than trusting your “gut feeling” or basing it on the number you prefer to have on your shelf.

There are many ways to set up reorder points, but the key is to be curious about what might work for your specific practice. You can set up:

  • Electronic reorder points with your practice management system, a dispensing cabinet, or other inventory software.
  • Physical reorder points like reorder tags, min/max labels, or checklists

These can function a number of ways, but the ultimate goal is to create a flag that you are running low without relying on the “want book!”

2. Spend more time on the items that matter

Time is always in short supply, so it can be helpful to remember that not all inventory items are created equal.

More time and effort should be spent on expensive or valuable items that are sold frequently (items with a high turnover), and less time should be spent managing products like tongue depressors, cotton balls, and those that are sold less frequently.

For example, expensive items, like vaccines, flea/tick prevention, and many NSAIDs, should be counted, monitored, and ordered more frequently than items like gauze rolls and cotton-tipped applicators. When you are short on time, prioritize and focus on the most important products.

3. Be intentional about stocking your veterinary pharmacy

The veterinary pharmacy has changed dramatically over the years, and it will continue to change. Many veterinary practices have historically ordered without regard to how much they were actually using or selling. This could look like: “We keep six on the shelf because we always have.”

Many practices also want to give their clients options, so they stock every type of flea, tick, or heartworm prevention in their pharmacy.

Prescription diets are a category that I’ve seen the biggest shifts in over the years. Many practices are moving toward only keeping diets for acute conditions on-hand (think: urinary, renal, GI, etc.), and only in small bags. Many practices are no longer stocking a huge selection with every flavor and size option.

Being intentional about stocking your pharmacy can help to:

  • Decrease your inventory costs
  • Free up cash that is currently being tied up in inventory
  • Streamline your inventory
  • Limit the number of items that expire
  • Cut down on the amount of time spent managing inventory

The key is to understand what your unique practice is selling and uncover the products that collect dust.

4. Have an action plan for backorders

There is no doubt about it: Backorders are extremely frustrating for you and your veterinary team. One of the most helpful things that you can do is create a communication strategy so your team is aware of backordered items so they don’t try to prescribe backordered products while seeing patients, and so they don’t get irritated at you (or the inventory manager) because they think the item was forgotten about or just not ordered.

Some ideas for backordered supplies:

  • Create an alert in your PIMS 
  • Add a marker to the label or spot on the shelf — This can help serve as a visual cue or reminder that the item is on backorder. Plus, if it has information about an alternative product listed, it helps your team not feel so “stuck” and powerless about the backorder.
  • Create a backorder communication station — Create a backorder “master list,” or a system for giving your team updates all in one location. You can use the free team communication tool Slack for this. Invite your entire team to the Slack workspace, and create a channel within that workspace for inventory management. Slack is great for all kinds of team communication, not just inventory, so create additional channels, like culture and team updates, and keep your team engaged. If you don’t want to try Slack, you can also use a Google sheet or a physical whiteboard.

In your various backorder communications, list the date the item went on backorder, product information, any alternative products, and the date of expected arrival (if known).

backorder veterinary inventory

5. Create a process for increasing prices as costs rise

Prices are going up on everything these days. When I’m auditing and analyzing a practice’s inventory, I commonly find products that the practice has priced lower than the cost of the item! That means that every time that product is sold, the practice is losing money and essentially paying the client to take home the prescription. Entering markup percentages and utilizing the purchase order function in your practice management software can be a great way to prevent this.

Many practice management systems will automatically increase the price of an item by a specified markup percentage when a purchase order or receipt is received and the system recognizes a higher cost.

Setting up a process for increasing prices as costs go up protects you from losing money. Do you currently have a similar system in your inventory? If not, what could you put in place to capture increases?

Veterinary inventory management can sometimes feel like a daunting task. If you’re feeling overwhelmed about all the projects that need to be done, think about the one that’s most important or will move the needle the most, and focus on that. But, as the saying goes, Rome wasn’t built in a day, and your inventory can’t be fixed that quickly either. Baby steps of progress will add up quickly, though, and soon you’ll have made more progress than you thought possible.

Need help streamlining other areas of your practice? From prescription management and pet owner engagement to veterinary business data and insights, Vetsource has what you need to thrive.

Nicole Clausen

Nicole Clausen

Nicole Clausen, CSSGB has over 13 years of experience in the veterinary industry with over 10 years in small animal practice. She worked her way up from receptionist to Operations Manager in various clinics and understands the intricacies and internal workings of a successful practice. Her firm, Veterinary Care Logistics, specializes in helping veterinary teams create a streamlined and efficient inventory management system.

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