Chances are you are missing out on product sales because an item isn’t readily available or in stock at your hospital. The worst part is that you might not be aware of the issue or that the problem might be bigger than you realized.
I noticed at my hospitals that a couple of inventory categories were down in the number of invoices being transacted. During the next receptionist meeting, I was shocked to find that clients were regularly told that we were out of a product and that they should ask again in the coming days. Judging by the sales reports, the clients had another idea.
Remember: Numbers don’t lie. Clients do not like to be inconvenienced, and their time is extremely valuable. I don’t blame them for deciding to purchase elsewhere.
Seize the Opportunity
We hear so much about minimizing inventories, staying lean and mean, just-in-time strategies, and quick turns. After all, inventory is the second-largest expense within our veterinary hospitals and we need to micromanage the systems and processes effectively and competently.
While it is true we want to be efficient and thoughtful with inventory counts, we can go quickly from one extreme of too much product to the other, hurting ourselves even more. We live in a fast-paced world. Clients visit a veterinary hospital on average 2.8 times a year. Compare that number to a grocery or box store’s 1.8 times a week. Who do you think has the advantage? If we have to turn away a client because we are out of a product, what are the chances the pet owner is going to return yet again?
Am I suggesting that we go on a shopping binge with our suppliers? Probably not, even though I can think of companies that would love you for it and encourage you. I am suggesting that we admit we have a problem. We need to dedicate ourselves to doing a better job of evaluating inventory turns and ensuring that when clients make the effort to stop in our parking lot rather than down the street, we have what they need. The client will appreciate the product availability, the pet will benefit and our bottom line will improve. It’s a win-win-win.
Back Up Your Words
Let’s take a step back and understand where the process really begins. It starts with your educated recommendations about a prescription food, medicated shampoo or groundbreaking NSAID. The recommendation most likely came in the exam room, but perhaps it took place during a phone call about diagnostic results. Either way, you likely finished the conversation by telling the client you carry the product and that the pet could get started on it today. Is that a true statement?
I would love to brag that my hospitals have every product available to support every recommendation made for every pet every day. Unfortunately, I would be lying. My hospitals come close, but when we are out of a product we offer an in-stock guarantee. That means we will complete the invoice at that moment and deliver the missing product to the client’s house when the item arrives. The policy is a bold statement about client service and respecting the client’s valuable time. It is also a statement that we believe in the pet’s best interests and that we don’t want the client buying something similar elsewhere and then not getting the same results.
Reorganize and Re-Evaluate
Think about this scenario: A client is running errands on her one-hour work lunch break. She takes the time to stop at your office to purchase a recommended product. Your receptionist nonchalantly tells her, “Sorry, we’re out and won’t have more until next week.” That’s frustrating for the client. After all, she is trying to be a good pet owner and do what is best for her pet, but then we let her down.
Now is the time to reorganize and re-evaluate our inventory counts to avert this scenario as often as possible. I get it. It’s tough. We have storage challenges, time constraints and inconsistent client buying patterns. All of these issues can and need to be overcome for the pet’s sake and for our long-term bottom line.
Let’s look at these categories we should be evaluating: nutrition, flea and tick preventives, parasiticides, anti-inflammatories, nutritional supplements, behavior therapies, medicated topicals and general pet supplies. Each holds the potential for regular repurchases by clients. Of course, fulfilling every hospital inventory need is important, from dental chews down to white tape and 1-inch gauze. But today, let’s address retail items that might be repurchased time and time again.
How should I gather the relevant data? First, identify your fastest-moving products or product categories. This can be done by evaluating an inventory sales summary report from the practice management software. Typically, these reports will provide gross sales and quantities for a specified period.
As I noted, product sales can be inconsistent at times. Sometimes it seems that every client shows up the same week to buy the same diet, but we need to prepare for spikes in demand. When running the reports, look at a quarter’s worth of data, if not more. When evaluating lines, identify products that might be seasonal.
With the top 10 percent of your products, I encourage you to keep 45 to 60 days’ worth on hand. Your inventory specialist should realize that each time we fall below the threshold, we need to repurchase. For the next 10 to 20 percent of products, I like to see about a 30-day supply on the shelf. Keep in mind that this is a fluid process. Consumer behavior changes, and so does supply and demand.
By adding structure and organization to your inventory counts, we can alleviate the dreaded words “We are out.” One lost transaction might not seem like much, but what if it happens once a day or even once an hour? The lost dollars add up quickly. I am more worried about the long-term effects of clients being told that something is out of stock. Clients can be forgiving and understanding, but their patience has a ceiling. When the ceiling is reached, the client will be off looking for a new product or service solution for their beloved pet.
Don’t let inefficient inventory controls be the cause.