Holding Costs, Stock Management, & Inventory Control Notes

Holding Costs & Stock Management

Impact of Holding Costs

  • Holding costs affect working capital and cash flow.
  • Clinics often face challenges related to variety of stock vs. usage.
  • TAFE clinic example: Vets want variety, but some items expire.
  • Goal: Minimize stock to bare minimum; order specialized items when needed.
  • Aims to reduce wastage & holding expenses.

Factors Influencing Holding Costs

  • Markup considerations are part of holding cost analysis.
  • Markup varies based on factors:
    • Expiration date
    • Refrigeration needs, requiring additional chilling costs.
    • Veterinarian prescription needs, factoring in labor costs.

Detailed Breakdown of Holding Costs

  • Storage equipment: Cold storage increases costs.
  • Labor: Staff time for managing inventory.
  • Insurance: Covering potential losses.
  • Obsolescence: Products becoming outdated due to newer options.
    • No reordering obsolete products to avoid wastage.

Wastage Management

  • Combating wastage is crucial.
  • Updating ordering data and reorder points is key when products expire.
  • Process:
    • Write off wasted products in the system.
    • Dispose of products thoughtfully and correctly.
    • Evaluate reorder points or remove product from stock list if unused.

Stock Losses & Theft

  • Stock losses can occur through theft.
  • Easy-to-pilfer stock: Near waiting areas or access doors.
  • Staffing efficiency impacts security.
  • Cameras or doorbells replace full-time receptionists in some clinics.
  • Risk: Potential theft of expensive items through front door.

Markup Strategies & Turnover

  • Low markups to increase turnover isn't always best.
  • Consider freight cost with each order.
  • Staffing implications: Wages for placing, receiving orders, and product displays.
  • Low markup pros: Popular with clients, fast stock turnover.
  • Low markup cons: Costs increase due to wages, freight.

Balancing Stock Control

  • Stock control requires critical balance, varies per clinic.
  • Factors: Clientele, popular products, vet and nurse recommendations.
  • Clinics vary in stock control effectiveness.

Physical Processes for Stock Control

  • Checking stock frequently.
  • Expiry date checks.
  • FIFO (First In, First Out) implementation.
    • Prioritizing closest expiry dates at the front of stock.

Ordering Processes

  • Regular ordering schedules.
    • Weekly orders at consistent times.
    • Staff awareness of arrival schedules.
    • Provides clients with estimated product arrival times.
  • Ordering upon reaching a minimum stock level.

Manual vs. Computerized Systems

  • Neither system is foolproof; manual processes are needed.
  • Backup systems for missed orders are essential.

Addressing Expiring Stock

  • Intervention strategies when stock nears expiry.
  • TAFE clinic rule: Daily stock checks.
  • Formula: Nurses ensure stock use + 2 months for sale (low foot traffic).
    • Example: 3-pack parasiticide needs 3 months to use, 2 months to sell (5-month window).
  • If short-dated, put on sale, discount, or use in-house.
  • Run reports of previous clients; contact them about discounted short-dated products.

Proactive Stock Management

  • Key is vigilance in updating reorder points and stock lists regularly.

Inventory List Scrutiny

  • Regularly review inventory lists and stocking levels.
  • Frequency varies: 3-6 months captures seasonality.
  • Monthly scrutiny is proactive, if feasible.
  • Updating stocking levels based on client profile changes is essential.

Software for Simplifying Stock Control

  • Most practices use software to some degree.
  • Historical: Manual ordering was common.
  • Current: Majority rely on computer, checked by humans for client orders.

Ordering Systems

  • Hybrid systems: e.g., 60% computer, 40% human.

Consumable Items

  • Saleable vs. Consumable items should be considered.
  • Software primarily tracks saleable stock.
  • Consumables (syringes, needles) often lack tracking in vet software.
  • Require separate manual tracking.

Managing Consumable Orders

  • Clinics vary: Weekly, monthly, or quarterly orders.
  • Some tally usage over three months for set orders.
  • Manual Checks: Nurses check stock levels with clipboards.
    *Tally stocks from various stockrooms.

Corporate and Multi-Branch Practices

  • Centralized ordering offers buying power.
  • Stock transported to branch clinics.
  • Branch clinics act as backup for low-stock situations.

Maximum and Minimum Stock Levels

  • Crucial to have max/min levels somewhere, be it computer/clipboard/shelving.
  • In SOPs:
    • Order when below minimum, triggered by reorder points.
    • Order quantity shouldn't exceed maximum stock level.

Factors Affecting Reorder Points

  • Current demand.
  • Seasonality (e.g., winter arthritis drugs).
  • Changing client profiles (e.g., influx of diabetic animal clients).

Managing Short-Dated Stock

  • Routine checks.
  • Discount to encourage sales.
  • Aim for cost recovery, better than disposal loss.
  • Short-dated stock lists from wholesalers need careful handling.

Monitoring Sales and Turnover Rates

  • Evaluate Seasonal Trends.
  • Track New Products.

Reliable Wholesalers

  • Impact of wholesaler back orders on business.
  • Consider higher stocking levels of fragile products due to industry back orders.

Focusing on High-Margin Products

  • Shift from stocking items easily found elsewhere (big pet stores/online).
  • Focus energy on vet-only or prescription products.

Examples of Stocking Changes

  • Clinics stop offering premium foods due to low margins.
  • Empty boxes are only being stocked/displayed to mitigate the loss of expired/wasted products.

Promotion Planning

  • Ensure sufficient stock to support promotions or marketing.

Stocktake vs. Stock Control

  • Stocktake: Process under stock control banner.

Understanding Stocktake

  • Counting saleable stock on hand.
  • Reconciliation of physical stock vs. computer records.

Frequency and Purpose

  • Frequency varies; some do small portions monthly.
  • Ensures correct charging and identifies potential theft.
  • Verifies correct stock management.

Challenges of Stocktake

  • Labor-intensive: Counting every tablet, estimating liquids, weighing controlled substances.
  • Often done after hours, increasing overtime costs.
  • Most clinics do annually.

Timing of Annual Stocktake

  • Done at the end of the financial year (June) for financial reporting purposes.

Accurate Stock Records

  • Keep records updated to match physical counts.

Addressing Discrepancies

  • Frequent counts until discrepancies are resolved.
  • Strategies: Staff meetings/training, recounts, improving storage.
  • Proper stock management and accountability of staff are crucial in having discrepancies.

EPA Guidelines and Disposal

  • Correct disposal of expired stock according to EPA guidelines.
  • Address proper disposal of food, S4 products, and consumables.

Responsible Disposal

  • Donation of products comes with risk.
  • Written agreements are needed when donating (e.g., expired stock agreement).

Returning Expired Drugs

  • Clinical medical waste correct disposal has fees included.
  • Consider who pays for the disposal.

Additional Stocktake Benefits

  • Review stocking levels, reorder points.
  • Clean, rotate, and check for damage/expiration.
    *Stock take is also an opportune moment to review storage location, or implement new shelving.
  • Maintain asepsis during counts.

Counting Tablets

  • Tools: Pillai app or tablet triangles.
  • Use aseptic techniques: Avoid touching tablets, clean triangle between medications.

Liquid Medications

  • S4 liquids: Estimated or weighed.
  • S8 medications: Vet opens safe and accompanies counts; weigh or draw up.

Consumables

  • Some clinics count only closed boxes of consumables.
  • Balance time-saving with accuracy.

Active Involvement in Stocktake

  • Stock take should be done in every clinic.
  • Provides foundational knowledge to actually utilize it.

Agreements and Disagreements

*Saleable stock is only the inventory that needs to be stock taken, only including consumables in some instances.
*Stock take takes place most frequently once a year with small inventory checks in portions.

Strategies to Combat Discrepancies

*Moving display stock to prevent theft and/or reduce stock losses.

Merchandising in Vet Clinic

  • Educating clients on how to care for their pets.

Key aspects and advantages to merchandising.

  • Educating clients on responsible pet ownership.
  • Products to recommend for care of pets.
    Drive sales to gain trust.
  • Nurses: Responsible in recommending certain courses in client's recommendations.

Merchandising insights via clinic stock

*Must be familiar with all products for quality based benefits.
*Always be up to date and never offer advice out of uncertainty to maintain proper recommendation.

Display Insights

  • SAAR for poison schedules.
  • Traffic locations for best marketing/visual appeal.

Visual Display Insights

  • Window displays to bring focus.
  • Layout promoting visibility with high quality to peak attraction in buyers.

Visual Marketing Aspects

  • Increase visibility with multiples of the same products/high end retail for top tier sales.

Pricing Insights

*Visuals will make it more convenient for clients as well as influence sales.
*Customers will only buy if they can see the price points, giving convenience.

Recommended Retail Pricing

*Pricing isn't always followed with wholesaler as they can differ based on price-point.

Assignments of Clients

*Correct animals assigned after inventory is displayed in sales.

Factors influencing markup

*Perishability.
*Pricing.
*Stock-turnover.
*Promotions.
*Theft.
*Compounding fees.
Factors like vet wages can play a part in ethical/financial based margins as well.

What impacts fees/client discounts and the ethics involved.

Policies Vs. Procedures.

*Written protocols between conducts.
*Terminology based SOP instructions on when to finite a standard task. (step by step processes).

Placing the orders

  • Data, special inventory, are all taken account of and manually inspected to best account for reorder points.
    *Consumable times typically inspected manually.

How software and interfaces are used/are reliable in various settings.
Use of online websites to place purchase orders.

Ordering receivables

*Proper storage and safe inventory must hold priority.
*Stock and proper dates must have documentation when arriving
All in assignment must be in multi process format.
*Must accurately display the proper process of inventory updates.
*Must also be able to follow a visual on the quantity amount that is displayed.