Perpetual Inventory Tracking Best Practices

Step 1: Stop overstocking and over spending – unturned inventory on shelves is like leaving cash sitting in storerooms

🗸 Tracking inventory and usage will reduce costs, reduce waste and increase cash flow

– Having extraneous items on-hand not only tie up cash, they’re prone to waste, breakage, loss and expiration

🗸 Make sure you’re tracking lot & serial numbers, as well as expiration dates

– Tracking lot & series numbers support product recall processes

– Expiration date tracking helps you manage and use on-hand inventory, rotating items that will expire soon to locations where they can be used

Step 2: Adjust your inventory based on history, purchasing patterns and lead time to receive products

🗸 Review enough history (usually 12-24 months) to see actual usage over time, with adjustments for seasonality

🗸 Create processes that enable par levels to “flex,” and adjust economic order quantities (EOQ) based on both seasonal use and overall usage patterns

Step 3: Increase visibility and improve management of items in inventory

🗸 Create better visibility to on-hand supplies across multiple locations

– When you can see supplies throughout your organization, you can avoid overspending by moving needed items from one location to another

🗸 Well-organized supply areas will support your inventory management efforts. Don’t forget to:

– Limit access to maintain better control and reduce loss

– Organize items by type and use, and label shelves to make it easy for both clinicians and supply chain technicians to find and replenish what’s needed

🗸 Improve consignment items – get proactive instead of reactive about your consigned inventory

– If vendors manage consignment items and replenish automatically, the result may be spending more than is necessary

Step 4: Inventory management improves cost management: by department, business lines or physicians

🗸 Organizations that used to evenly divide costs across physicians or business lines are beginning to allocate specifically to departments, procedures, even individual physicians

🗸 This drives visibility to actual costs and profitability of procedure areas, and better usage and budget tracking

– Helps support better cost center management, budgeting and planning

Step 5: Tracking inventory and consumption levels helps an organization reconcile to billing activity, ensuring full billing capture based on product consumption

🗸 Track usage to patients for more accurate billing

Examples:

– Ortho offices are tracking all durable medical equipment to ensure accuracy

– Physicians prescribing specialty drugs often track to patient record to ensure billing reflects what’s actually used and account for all pharmaceutical products

Step 6: Create the ability to auto-reorder products based on consumption

🗸 Barcode labels and scanners or a smart phone app are the fastest and easiest way to track and replenish supplies

– If scanning is not available, you can manage this with requisitioning

🗸 Technology can be the facilitator to better management – but you still need good processes to support ongoing inventory management

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