When you don’t know what you have, it’s hard to see what you need.
Historically, a lack of access to suitable inventory management tools designed for the industry hampered business improvements. However, as dental organizations struggle to remain profitable, standard inventory management practices can help secure the cost savings you need and make for good first steps in gaining control of your spend.
As we’ve said before, there are big costs to poor procurement, and good procurement starts with solid inventory management. Because when you don’t know what you have, it’s impossible to make smart, informed decisions on what it is you should buy.
Let’s take a look at the basics of inventory management and some of the best practices that will help guard those hard-earned profits.
Inventory management is the tracking of your most critical supplies, including what you have on order and any movement in and out of your stockroom. The goal is to know how much you have on hand, when more will be delivered, and, most importantly, when it’s time to order. But the benefits don’t end there.
Good inventory management means you have control over your inventory and are able to make smart buying decisions based on facts and data, buying what you need, when you need it, in the quantity that makes the most financial sense for your business.
Inventory management enables you to keep enough inventory on hand for production requirements while avoiding the hefty costs and repercussions of carrying too much stock, such as impeded cash flow and assuming financial losses from expired inventory. It is the framework to the procurement processes that stop profit leakage and enable you to leverage your purchasing power and lower your cost of supplies and improve your profits—making it every bit worth doing.
Whether you opt to record your inventory counts and movements with a barcode scanner to increase efficiency and accuracy or start with a manual process such as Kanban, the critical part is that you start. In case you haven’t heard it before, unlike increasing revenue, every dollar of cost reduction makes it straight to your bottom line.
We’ve actually estimated that in a typical dental practice with a 34% profit margin, every $100 saved in overhead yields the same profit to its owner as increasing production by $290.
At Method, we believe in practical, employee-focused real-world solutions. To ensure long-term adoption and successful implementations, it’s imperative you “keep it real” during project selection and execution with careful consideration given to your available human and financial resources. Remember the Kaizen philosophy, small but consistent steps forward will get you further faster, so set realistic goals.
Not finding the supplies you need when you need them can be frustrating (and wastes valuable employee time). And counting inventory when your stock is in chaos is equally so. Establishing a streamlined process for stocktaking (the counting of your inventory) will help limit errors and ensure the reliability of numbers while reducing the time spent and lessening frustrations.
Although our hope is the below will help you streamline the process and thereby make it more manageable, we understand that regularly counting inventory may not be a realistic starting point for some dental practices. If this is the case, we suggest scanning your dental supplies as they are pulled from stock and then performing inventory counts when you are able or when large inventory discrepancies are found.
Before performing your counts, we suggest you clean and organize your stockroom.
Once you’ve designed a process, standardize it by documenting it and training delegated employees. Be detailed enough in your guidance and provide step-by-step information. Now, set a stocktake schedule and adhere to it. Then, make sure all your employees are aligned on the above. They should know by who, when, and how your counts will be performed.
Remember, new processes take some time to take root and may be designed imperfectly. Follow up, and ensure the counts are completed as planned. Retrain or make adjustments to the process if issues are found. Reiterate until success is achieved.
We admit we may be biased, yet, the fact remains— leveraging automation with a cloud-based Procurement Management System (complete with inventory management, barcode scanning capabilities, and client support to help you implement streamlined best practices) is one of the best profit-improving decisions you can make for the health of your dental organization.
Standard, streamlined, scalable processes ensure effective procurement despite any turnover, so you can leverage your volumes, improve your cash flow, drive cost savings and ensure you pay no more than you should.
An electronic Spend Management Platform can Help DSOs:
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