Practice Management: Inventory Management

An effective inventory control system improves cash flow and practice profits.
Inventory Management

The treatment supplies and retail products used in medical aesthetic practices represent the second-largest operational expense, after personnel costs. Keeping track of these products with an efficient inventory management system can help your practice save money and maximize profits.
“Inventory control is incredibly important in the aesthetics practice because many of the products are high-value,” says G. Marshall Franklin, Jr., co-founder of Practice Enhancement Specialists in Atlanta, Georgia (www.pesconsultants.com). “Items like fillers and toxins such as Botox are expensive and they can tend to walk away if you don’t keep track of them.”
Inventory control not only helps prevent theft of valuable supplies; it also ensures that you are not tying up resources by overstocking product or missing out on sales by coming up short on needed supplies. “An oversupply represents a wasted investment, as tens of thousands of dollars of slower moving inventory may unnecessarily sit on shelves,” says Darrin M. Rosha, general manager and corporate counsel for Crutchfield Dermatology in Eagan, Minnesota. “Failure to keep an adequate inventory can prevent the clinic from timely service and sales to its patients. If you’re out of inventory, you’re out of business.”

The Goals of Inventory Control

Inventory control systems provide a number of benefits to practices, including loss prevention and improved cash flow. Instead of purchasing a lot of expensive supplies all at once with a large outlay of cash, you can parcel out expenditures over time by ordering products on an as-needed basis. A good system also eliminates time wasted searching through cluttered supply closets for needed items.
An aesthetics practice may stock dozens, even hundreds of different products, making it impossible for staff members to determine at a glance what they have on hand and what supplies are running low. Lewis A Lippner is the administrator for Advanced Dermatology (www.advanceddermatologypc.com), the largest dermatology group in the Northeastern United States, with 12 offices in two states. The biggest mistake he sees practices make is “loss of control—not knowing what you’re using or what you have in stock.”
The basic steps of inventory control include:

  • Performing regular physical counts of products within the practice
  • Setting reorder levels
  • Receiving shipments and verifying orders against the purchase orders
  • Stocking products to ensure that older products are used first

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