Inventory Management Solutions: From Chaos to Confidence

How Nicole Clausen’s early frustrations with inventory management led to industry-wide solutions for companion and equine veterinary practices.

People who know Nicole Clausen, CSSGB, CCFP, now may be surprised to hear the origin story behind her calling to the veterinary profession. As a brand-new inventory manager at a brand-new practice, she likes to joke that the only training she received on when to order supplies was “when you shake a bottle, and it feels low, order it.”

Indeed, she had no idea what to order or how to do much of anything related to inventory. “I also didn’t have anyone to turn to for questions or support,” said Clausen, founder of Veterinary Care Logistics. “I was running out of inventory left and right, and I thought there had to be a better way to do this.”

So, Clausen became an inventory sponge by learning everything that she could and setting up her veterinary practice’s supply cabinets and pharmacy. She developed her own systems and processes, and eventually got her inventory to run smoothly.

Her distributor rep noticed the improvements, and asked Clausen to do a presentation on inventory to a group of practices. “That experience lit my soul on fire; I knew that I wanted to educate others on inventory,” she said.

Veterinary Care Logistics evolved from those experiences. Clausen started VCL to help other veterinary professionals manage inventory in a way that makes sense for their unique practices. She has created a support system and resources that inventory managers can turn to for education, mentorship, and guidance.

Why it matters

Inventory management is a critical component of veterinary practices’ business operations for several reasons. “First and foremost, we can’t treat our patients or serve our clients without inventory,” Clausen said. “The whole reason many of us are a part of veterinary medicine is to care for and treat our patients (or enable others to serve their patients and clients). If we don’t have the appropriate inventory in stock, we’re not able to achieve our mission and our own personal ‘why.’”

Second, inventory management is critical to the bottom line of the practice. There are significant financial aspects to consider. Mismanaged inventory can cost practices hundreds of thousands of dollars each year, Clausen said. It can negatively impact a practice’s financial performance, create cash flow challenges and reduce the profitability of the practice. It can also limit the profit that can be used for investing back into the practice, team wages, equipment purchases or other practice growth opportunities.

Finally, when inventory is mismanaged, it can negatively impact the morale of the inventory manager AND the team. From a veterinary team’s perspective, it can be challenging when supplies or products are out often, impacting the ability to care for patients. “From the inventory manager’s perspective, it can be so disheartening and emotionally taxing to know your inventory is chaotic or you’re not doing as well as you could, but you have no idea how to get better,” Clausen said.

The inventory consult workup

When Clausen consults with clients, she starts by gathering a baseline of insights to fully understand what their goals are and where they want to go. From there, she will put together a comprehensive audit where she uncovers information about their inventory, and leads a thorough analysis of their inventory system, financial information, and several key performance indicators.

She also performs a margin analysis for each item in their inventory; this helps identify any items where the pricing is off. “I often find items that are priced lower than the cost of an item or find items that have been significantly undercharged for (without the practice realizing it),” she said. “I do this to help them understand where they are at and why they haven’t been able to reach their goals.” Then, Clausen works with them on education, guidance and mentorship. She trains them on how to set up their practice management system for inventory, gives them a step-by-step action plan for getting their inventory under control and helps them set up systems and workflows to help achieve their goals.

Ultimately, Clausen wants each practice she works with to feel empowered and confident in their inventory. Above and beyond that, she helps them:

• Reduce their cost of goods sold (Clausen said she averages a COGS reduction of 5-10%+ – which translates to hundreds of thousands of dollars per year)
• Increase their inventory turns to improve cash flow
• Free up lots of cash that’s just tied up in inventory
• Decrease the time (and stress) it takes each week to manage inventory
• Leverage their practice management system or other software to automate and streamline their inventory processes, and more.

“Basically, I want to help make inventory management easier and I want the manager to feel empowered doing so!”

A transformed practice

A veterinary practice with successful inventory management practices is a thing of beauty to Clausen. “Practices can take less time managing inventory and get back to their patients faster,” she said. They can find what they need, when they need it. There are clear systems for organization and storage, and the ordering process doesn’t take a ton of time. It also doesn’t rely on other team members “writing it on a whiteboard” or other equally frustrating methods. Having effective inventory management provides so much clarity and ease in the practice. It really is such a night and day difference!”

Distributor reps play a “huge” role in helping a practice turn around their inventory, Clausen said. Sometimes a practice doesn’t know what’s possible for them. Practices don’t realize that things could be better or that their role could be easier. A rep can help with navigating backorders, pointing them to resources they don’t know about, finding alternative products that might work better in a situation, a less expensive generic option, or even just being there and offering support and encouragement while they are turning their inventory around. “I’ve even had reps sponsor training courses I offer for inventory or practice managers,” she said. “It can sometimes be a long haul, so it can be so impactful knowing that someone is in your corner!”

Inventory Ally

Along with her consulting work, Clausen helped develop an innovative tool that simplifies some of the more rigorous parts of inventory management. The veterinary industry, much like other service sectors, often grapples with the intricacies of inventory management. Inventory Ally was brought to market to fulfill this need, leveraging cloud-based technology to offer a sophisticated yet user-friendly tool. Many hospitals will struggle with revenue growth this year because the capacity for price increases is limited and year-over-year patient visits have been in decline. Labor, the largest expense for a veterinary hospital, is already stretched and highly competitive. For hospitals to improve EBITDA and their profitability, they need to focus on optimizing inventory management and saving money on COGS.

“Inventory Ally was born from the idea that inventory management should be easy and not such a manual process,” she said. “Up until now, there hasn’t been a software in veterinary medicine that helps to manage the inventory that is sold (like pharmaceuticals) and consumed (like hospital supplies or white goods). Inventory Ally simplifies demand forecasting and guides replenishment to ensure time and money are optimized to meet hospital needs, and to focus the attention of veterinary professionals on the patients and customers they serve. We wanted veterinary professionals to spend more time doing what they love and spend less time on manual tasks that can be automated.”

Inventory Ally specializes in automating and optimizing inventory replenishment. It does so by analyzing consumption patterns in order history, predicting future needs, and ensuring that inventory levels are maintained efficiently. This approach not only reduces the risk of stockouts or overstocking but also helps in managing costs more effectively.

For veterinary practices, Clausen said Inventory Ally’s impact is multifaceted:

• Operational efficiency: Reduces the time and effort spent on manual inventory tracking and ordering. Hospitals report saving 2-4 hours per week.
• Cost management: Helps in maintaining an optimal stock level, avoiding unnecessary expenditures on excess inventory. This results in 30-40% less inventory in the hospital, which frees up available cash from the balance sheet for investment elsewhere.
• Reduces inventory loss by increasing inventory turnover: Most hospitals report an additional 2-4 percentage points improvement to the profitability because of reduced cost of goods sold.
• Patient care improvement: Ensures that necessary items are always in stock, leading to uninterrupted service and enhanced patient care as well as team and client satisfaction.

Lightbulb moments

Whether it’s as a consultant or through Inventory Ally’s services, it’s still Clausen’s mission to see that every veterinary professional who handles inventory feels like someone is in their corner. Since she started VCL in 2017, Clausen now has five different self-paced inventory courses, including a certification program, hosts the Inventory Nation Podcast, two inventory manager communities with over 10,000 people, consulted practices from coast to coast and beyond, offers a suite of Controlled Substance Log Books, and co-founded Inventory Ally.

“I always joke that it’s pretty safe to say that I love inventory management,” she said. “I also love seeing the ‘lightbulb’ moments and watching inventory managers excel, and their confidence soar.”

When things go wrong

Clausen said the two biggest things veterinary practices often get wrong with inventory management are on opposite ends of a pendulum. They think it’s either too complex to try and improve – or that it doesn’t matter. “Inventory management can be simple, sustainable and doesn’t have to take a lot of time,” she said. “Plus, effective inventory management is so important for our patients, our teams and the financial health of any practice.”