4 veterinary inventory trends to watch in 2020: Is your practice ahead of the curve?
Years and years ago, when I first began my journey in veterinary medicine, managing inventory was more of an afterthought and focused on product replenishment rather than maintaining a critical operation, a business inside of a business. I vividly recall my practice manager scouring through every item in the practice and diligently writing down “in the book” low items. She would fax in an order to one distributor with no inventory module inside of the practice management system.
Historically, many veterinary practices would order without regard to how much they were actually using or selling. They also wanted to give their clients options and would stock every type of flea, tick, or heartworm prevention in their pharmacy. As a result, expired medications, overstocked products, elevated inventory costs, and stockpiling ran rampant.
Over the years, I’ve noticed a distinct shift in the way we manage our practices and our inventory. In recent years, the importance of an inventory management strategy has become increasingly more apparent. We’ve seen overhead, product, and labor costs increase at an unsustainable rate as the call to efficiency and strategy becomes stronger.
We’ve also seen a shift in consumer behavior and expectations, an unprecedented number of back-order products and supply chain disruptions, and a consolidation trend for private veterinary practices.
4 Veterinary Inventory Trends
With all of that being said, I’ve seen several major key patterns emerge in practices all across the country. Let’s dive into four veterinary inventory trends.
1) Managing back-orders and product availability
Due to material shortages and supply chain disruptions, I’ve seen more back-orders and allocations than ever in the last couple of years. When navigating back-ordered products, there are two key things to consider:
- Where can I find this product or an alternative?
- How can I best communicate this to my team and keep track of current back-orders?
Historically, many inventory managers have just had accounts with one or maybe two distributors to purchase from. With back-ordered products becoming more prevalent, it’s a smart idea to have accounts with a variety of distributors (both small and large) to help source products. In addition, building relationships with your sales representatives and using a tool like Vetcove can help maximize the potential of finding in-stock or alternative products.
To communicate these back-orders effectively to your team, there are several creative options. You can develop a “back-order command station” that lists any back-ordered product, estimated date of arrival, and any alternatives if applicable. You can also add a label where the product is normally stocked, so if a team member reaches for the item, they can immediately see it’s on back-order. You can also add an alert in your practice management system or use a practice-wide communication tool.
The key is to find what works best for your unique situation.
2) Utilizing a white-label online pharmacy
As our client’s expectations and purchasing behaviors shift, it’s important for us to adapt and pivot our services to meet our clients where they are.
More than ever, clients are interested in purchasing online when it is convenient for them and for the best price. Also, as we realize that stocking every product does not serve our practice profitability goals, how can we limit the products we carry and meet our client’s expectations?
A personalized, white-label online pharmacy can be a valuable tool.
More than ever, especially with the social distancing of COVID-19, more veterinary practices are using or considering an online pharmacy such as Vetsource. Practices are using them in a variety of ways; to decrease the number of products that are stocking in-clinic, an efficient way for prescribing compounded medications, allowing clients the ease and efficiency of autoship, or to compete with other outside online pharmacies.
3) Developing a more intentional inventory strategy
One of the biggest (and most exciting) trends I’ve noticed is a shift away from visually checking every product in the practice or ordering as things run out and shifting towards creating an ordering strategy.
Many inventory managers are utilizing tools like reorder tags, minimum and maximum labels, reorder points in their practice management system, and reorder bins to flag when an item is running low. Creating an inventory strategy allows us to move away from shaking the bottle and ordering when it feels low, ordering every day, or relying solely on the want book and into a more balanced, intentional ordering system.
As a result, many inventory managers are experiencing less overwhelm, a decreased number of expired items, and a reduction in their inventory costs as a whole.
4) Carrying fewer in-house prescription diets
One of the trends that’s increasing traction in practices across the country is carrying fewer prescription diets in-house and recommending more through their online pharmacies. Some practices are reducing the number of SKUs they stock to time-sensitive foods or an overall reduction to the most popular selections. Other practices are only carrying the smallest bag size and for all larger sizes, directing clients to their online pharmacy.
Practices are starting to evaluate the expensive indirect costs of prescription diets, how much storage they take, and the logistical challenges with minimum orders. As a result, more and more practices are seeing the benefits of leaning on their online pharmacies.
Stay up to date with inventory trends and be strategic
As our product, labor, and overhead costs continue to rise, it’s vital to improve our efficiency and focus our attention on creating an inventory strategy. If you haven’t developed one before or are just getting started, remember, you aren’t alone!
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.