Inventory Costs: Hiding in Plain Sight


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Implementing and utilizing better processes and systems is the biggest opportunity for veterinary practices to be successful when managing their inventory, said Denise Saaf, director of marketing at Vetsource. The company started as a home delivery service in 2008 and has evolved its solutions into a comprehensive digital platform that provides pharmacy, technology, and business services for the pet health industry.


Saaf said veterinary practices could benefit from better understanding how outsourcing some of their in-practice inventory – whether it’s preventatives or diets – could help their overall bottom line, and in some instances drive revenue back to their practice without having to output the cost of carrying the inventory. For example, Saaf said practices that have an online pharmacy are better able to keep inventory costs down by only carrying the necessary items needed in practice and pushing their remaining scripts through their online pharmacy. Many online pharmacies also fully integrate with most practice management software, allowing better insight into patient compliance, which in turn drives better health outcomes for the patient.


Some larger hospitals focus on inventory optimization. These hospitals may have a wide range of products that are preferred by different veterinarians, which can cause them to keep a lot of different products or brands on hand that generally do the same thing. “Practices can cut down on having to carry such a wide variety by limiting their in-house inventory to the most commonly prescribed products and giving their veterinarians additional options through their online pharmacy,” Saaf said. “This can go a long way to streamline inventory carrying costs and the costs associated with managing so many different items in-house.”

Ticking clock

Saaf said there are certain inventory costs that practices don’t realize they’re incurring, like the FTE time it takes to manage inventory or the space it takes up that could be used for something else, such as a revenue-generating exam room or more space for staff to work. “Holding costs for inventory of any medication or diet can be a ticking clock when it comes to expiration dates and potential loss of revenue if they’re not purchased within the allotted time frame.”


A transformed veterinary practice would implement a streamlined approach to its inventory management strategy:

  1. Order only the medications, products, “or items that are needed day to day in the practice,” Saaf said.
  2. Reduce inventory costs, save staff time, and free up space by carrying only small bags of diets to get clients started. Then drive the remaining orders for larger bags to their online pharmacy. “Staff will no longer have to lug bags around the practice and clients will get their pets’ food delivered conveniently to their home.”
  3. Implement systems that can help them better track inventory or even reallocate it, “like moving certain products to an online pharmacy.”


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