In most veterinary practices, inventory is the second-largest expense after payroll. But unlike labor costs it’s often overlooked as an area of strategic opportunity. To clarify why inventory matters for veterinary businesses and what you need to know to run it more efficiently, the VetBooks team recently hosted a webinar with Emmitt Nantz, MBA, co-founder of Inventory Ally.
Inventory Ally is a comprehensive veterinary inventory management software solution that integrates with most hospital practice management systems. Emmitt is an expert in the field and provided us with crucial tips. Here’s an overview of our discussion, including five things to keep in mind for smarter veterinary inventory management.
1. You’re wasting more inventory than you think.
Reactive ordering, or stocking up on supplies to try to prevent surprise stockouts, may feel like a safety net, but it leads to cluttered shelves, expired products, and hidden waste that erodes profitability.
It’s surprisingly easy to overlook how much money is wrapped up in overstocked cabinets. Unused, expired, or poorly tracked items can account for 2% to 4% of a veterinary practice’s total revenue. That’s $20,000 to $40,000 for every $1 million in revenue that could be invested in your veterinary team, medical equipment, or facilities.
Excess veterinary inventory also affects your balance sheet. The more you store, the less liquid cash flow you have available. Think of each unused item as money you’ve loaned to the shelves, and you might not get it back if that product expires.
2. Lost charges and discounts add up fast.
Missed charges and discounted products that are not accounted for can quickly throw off inventory costs and the hospital’s broader financial management. These issues are most apparent with consumables, such as syringes, gauze, and gloves, which are often not itemized but can still make up around half of the clinic’s overall cost of goods sold (COGS).
To tighten things up, standardize the way you enter products in your PIMS. What you buy should be what you sell, using the same units (e.g., bottle, tablet, or mL). Selling the same item multiple ways can create discrepancies and make counts a time-consuming mess. Additionally, ensure you bill for all services and document discounts rather than leaving items off the invoice entirely.
3. Buying in bulk isn’t always a bargain.
Bulk deals from suppliers may look appealing, but they shift the risk of expiration and overstock from the distributor to your shelves, potentially turning a short-term discount into a long-term loss.
When a product runs low, you might reorder more next time. With incentives for bulk pricing, you can easily find yourself storing thousands of dollars’ worth of excess product. That excess—even if it doesn’t expire—increases the risk of waste, shrinkage, and theft, and the chances that you’ll find it.
If you can’t track it, you can’t control it. Set logical reorder points and maintain optimized inventory levels using forecasting tools, such as your practice management software or spreadsheets, to determine your actual restock needs.
4. Cluttered shelves cause stressed-out teams.
Disorganized inventory workflows can negatively impact the team’s efficiency, morale, and overall well-being. Running out of essential items, rummaging through boxes to find needed supplies, and unpacking multiple shipments each week creates unnecessary stress. Overordering clogs up treatment areas, but understocking compromises patient care.
Cycle counts—small, regular counts of select items that replace larger, less frequent counts—are an effective strategy for improving veterinary inventory management and controlling the content of your shelves. You can perform cycle counts on just a few items each week, making inventory less disruptive and allowing the team to catch problems earlier.
Pair cycle counts with smart delegation for a more complete solution to your inventory woes. Assign one team member each to count, order, and unpack deliveries. This strategy divides the workload and helps prevent theft or diversion with a team approach to accountability.
5. You can’t make good decisions without solid data
Your veterinary practice inventory data has the power to guide smarter budgeting, pricing, and forecasting, but only if you can trust it. That means counts must be accurate in your PIMS and reflect current costs.
Inventory management software, such as Inventory Ally, can help clinics optimize profitability through better overall veterinary inventory management. Systems like these can give practice owners more visibility into inventory control strategies that reduce waste and support long-term goals.
Optimizing veterinary inventory management
Practices that prioritize inventory may find that financial clarity, employee job satisfaction, and the client experience can each improve as inventory processes become more efficient. Reducing waste, tweaking inventory processes, and understanding the impact of COGS can help your practice reclaim hidden costs.
Ready to take control of your inventory? Watch the full webinar here for more insights and real-world examples. To learn how veterinary bookkeeping and inventory work hand-in-hand to improve overall hospital management, contact VetBooks to schedule a meeting.