Computerization can make your in-house inventory a practice-builder instead of an economic and organizational nightmare.
Want to know how you can make your in-house inventory a practice builder instead of an economic and organizational nightmare? The answer is simple: computerize. How many times have you looked at the cash flow going in and out of your in-house dispensary and asked your office manager, “Where is all the money going?” A good inventory control application should be able to answer that question and more. The software should keep track of the quantity on hand (QOH), reorder points, shipping charges, sales tax, gross sales, employee bonuses, and profit margins. The application should also generate comprehensive reports that indicate trends and patterns helpful for long-range planning.
Sure, your office staff may be able to manage reasonably well by keeping track of inventory the old-fashioned way-by hand. However, by computerizing your in-house dispensary, you will bring your practice to the next level. The effective use of computerized inventory control can make all those products sitting on the shelf go to work for you.
According to a Chiropractic Economics Reader Survey conducted in March 1997, more than 78% of chiropractors’ offices are already computerized. Likewise, 48.5% of you sell products to patients. Those product sales include vitamins/nutrition, 44.1%; pillows, 42.6% and “other” products (such as orthotics, educational materials, etc.), 41.1%. These statistics reinforce the idea that it simply makes good business sense to computerize your inventory. If your practice inventory is already computerized, you will want to make sure the software you are using is working as hard for you as it should be.
When shopping for an inventory control application, consider the following four areas.
1. The application should be extremely easy to useand to learn. Although the term “user-friendly” has become somewhat of a cliche, you should check out the application before purchasing it to make sure your staff will be able to pick up the basics quickly and easily. Ideally the program should be mouse-driven and based on a “point-and-click” system so staff members with little computer experience can easily fill patient orders and enter product information.
Check if the software company offers informational literature and a “demo disk.” Show the information to your staffwho will really be the ones using the applicationand see what they think. Make sure you find out what type of technical support and instructional materials (such as a comprehensive user’s guide) the company provides. You should also ask if the company offers opportunities for continuing education that will help you and your staff get the most out of your investment.
2. The application should help you and your staff help your patients. Look for an inventory control application that allows you to retrieve a purchase history for each of your patients. A good inventory control application will include a comprehensive database that allows your staff to find out what brand of vitamin C your patient bought last time he or she was in, rather than relying on memory or trying to shuffle through paper files and charts on a busy day.
3. The application should assist you in keeping an eye on the bottom line. Keeping a handle on the profitability of your inventory means you should invest in a software application that tracks the cost of products, gross sales, shipping charges, sales tax, employee bonuses and profit margins. When you are armed with this information, you will have a better idea of how to set prices for each product you sell. For example, if a particular company’s shipping charges are excessive, you will be aware how much those charges eat into your profit margin. You can subsequently increase the retail cost accordingly, negotiate a better rate from the vendor or shop around for a different product source.
An effective inventory control application should include an inventory audit that traces all transactions, including adjustments to inventory. The application also should generate vendor performance reports, product master reports and product activity reports. It should also track discontinued products.
With security an increasing concern in medical practices, your inventory control application should include a multi-tiered password system to prevent employee oversight and theft. This type of system can also automatically keep track of employee bonuses.
4. The application should remove the guesswork in knowing when to reorder a product. The application should allow your staff to easily keep track of quantity on hand (QOH) and reorder points. At any given time, you should be able to define your QOH, determine how much money is on the shelf and how much product is available for sale. The application should generate a suggested-buy report that compares a predetermined reorder point to the QOH to make reordering decisions much simpler.
The program should track information on product activity and timeliness of vendor shipping to establish reorder points that keep your inventory running smoothly. You want to ensure that you don’t have excess inventory on hand, but you also don’t want to be running so lean that you run out of a particular product. For example, you may sell five units of product XYZ per week. If the vendor normally ships within two days of placing an order, you would want to set your reorder point at seven (i.e., you order more product when you have seven units left in stock). On the other hand, if the shipping time averages two weeks, you will want to figure a reorder point with a bigger buffer.
Once a reorder point is met, the application also should give your staff the ability to fax purchase orders directly to vendors with minimal effort. In addition, the application should have the ability to make all necessary conversions regarding ordering versus selling units, so inventory can easily be entered by the case and sold by the bottle.
Computerizing your inventory control and management simply makes sense. You will beef up your bottom line and your patients will benefit from streamlined record keeping and a more efficiently run system. You’ll wonder why you didn’t do it sooner.