Power Point Notes for Stock Control

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Alan Robinson B.V.Sc. MRCVS DMS
Stock Control
Where does it all go?
Stock Control
Stock Control (or Inventory Management)
• is a separate part of the business
• needs to generate a profit.
To do that it needs to
1. be priced profitably
2. stock less and
3. sell (turn over) more.
5 steps in gaining and retaining
control of stock management
1. Take control.
2. Know your figures: ‘If you can’t measure it you can’t
manage it!’
3. Simplify, simplify, simplify.
4. Ordering cycles.
5. Control Dispensing.

2. Platinum Practice
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Take control.
Make sure someone is in charge of Stock
Control – it is a full time job and
responsibility that requires a dedicated
and trained individual to look after.
They are responsible for a budget of
£250,000 to £350,000 in the average
veterinary practice.
£120 = £100 Income =
PROFIT
plus
Drug Costs
plus
Wages
plus
Fixed Costs
Fixed
Costs
Wages
Drug
Costs
PROFIT
£40
£15
£30
£15
Business Costs
Vet, Nurse &
Reception Wages
Buildings, Admin,
Cars, Marketing, CPD
etc
MARKUP
Cost Price per
product
Number of Products
soldx
INCOME
Consumable Costs
Retail, Drugs, Food,
Consumables,
oxygen, cremation,
laboratory
Cost PRICE per
product
Number of Products
boughtx
Consumable Income
Professional Fee
Income
COSTS
No. of Vet hours Rate per hourx
30%
40%

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Mark-ups?
By Category
• GSL – 30 – 40%
• PML – 50 - 70%
• POM-V – 100 – 150%
Average Mark-up
= 83%
Average Profit =
55%
Drug Profitability
• Consumable Costs = 30% of Income
• Consumables Income = 40% of Income
• Mark-up avg. = 33%
• Profit avg. = 25%
• Therefore Profit = 10% of Income
John Sheridan
• In my experience veterinary practices generate
net profits ~15% on medicine sales (after
allocating the appropriate share of staff and
overhead costs)
• but much less than 5% on the sale of
professional services. Very many practices
make a loss on the sale of their professional
expertise and time

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Business Costs
Vet, Nurse &
Reception Wages
Buildings, Admin,
Cars, Marketing, CPD
etc
MARKUP
Cost Price per
product
Number of Products
soldx
INCOME
Drug Costs
Retail, Drugs, Food,
Consumables,
oxygen, cremation,
laboratory
Cost PRICE per
product
Number of Products
boughtx
Drug & Retail Income
Professional Fee
Income
COSTS
No. of Vet hours Rate per hourx
1 2
3 4
FREE!!
Know your figures
‘If you can’t measure it you can’t manage it!’
At any point of time you need to be able to track
 What you have got and what you have sold by
product and category
 Where it is by location, branch, car, etc.
 How much it cost (net/net price)
 When you need to sell it by (reduce wastage and
overstocking)
 When you need to order more (measuring stock
turns)
Mark-ups?
By Category
• GSL – 30%
• Food – 40%
• PML – 70%
• POM-V – 100%

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The Top 20%
18 chronic
6 acute
Product Name
T
ot
al
Total % of Total Cum Pareto 1 week 2 week Month
Antepsin Suspension 250ml 17706 7.7% 17706 7.7% 341 681 1476
Prednisolone Tabs 5mg 15479 6.7% 33185 14.4% 298 595 1290
Felimazole Tabs 5mg 15210 6.6% 48395 21.0% 293 585 1268
ZANTAC SYRUP 150MG/10ML 11273 4.9% 59668 25.9% 217 434 939
Noroclav 250mg Tablets 11226 4.9% 70894 30.7% 216 432 936
Lactulose Sol 10025 4.3% 80919 35.1% 193 386 835
EPIPHEN TABS 60MG (PHENOBARB) 9460 4.1% 90379 39.2% 182 364 788
Noroclav 50mg Tablets 8044 3.5% 98423 42.7% 155 309 670
Viacutin Plus Caps 300x500mg 7860 3.4% 106283 46.1% 151 302 655
EPIPHEN TABS 30MG (PHENOBARB) 6084 2.6% 112367 48.7% 117 234 507
Piriton Tabs 4mg 5136 2.2% 117503 50.9% 99 198 428
Rilexine Tabs 300mg 5136 2.2% 122639 53.2% 99 198 428
SOLOXINE TABS 0.8MG 4714 2.0% 127353 55.2% 91 181 393
Rilexine 600mg 4708 2.0% 132061 57.2% 91 181 392
Fortekor Tabs 2.5mg 4082 1.8% 136143 59.0% 79 157 340
VETMEDIN TABS 5MG 3770 1.6% 139913 60.6% 73 145 314
Florinef 0.1mg Tabs 3248 1.4% 143161 62.1% 62 125 271
Frusemide Tabs 20mg 3030 1.3% 146191 63.4% 58 117 253
Antepsin Susp 2966 1.3% 149157 64.6% 57 114 247
* Propofol Vials (novartis)-destock 2803 1.2% 151960 65.9% 54 108 234
Incurin Tabs 2648 1.1% 154608 67.0% 51 102 221
Chlorhexidine 2567 1.1% 157174 68.1% 49 99 214
Codeine Linctus 3mg/ml 2490 1.1% 159664 69.2% 48 96 208
Neo Mercazole Tabs 5mg 2396 1.0% 162060 70.2% 46 92 200
LANOXIN PG TABS 0.0625MG 2366 1.0% 164426 71.3% 46 91 197
Rilexine Tabs 600mg 2330 1.0% 166756 72.3% 45 90 194
Vetmedin Caps 1.25mg 1952 0.8% 168708 73.1% 38 75 163
TAGAMET TABS 200MG 1820 0.8% 170528 73.9% 35 70 152
Viacutan Caps 500mg 300 1720 0.7% 172248 74.7% 33 66 143
FRUSEMIDE TABS 40mg 1566 0.7% 173814 75.3% 30 60 131
5 Acute = 16%
25 Chronic = 83%
Drugs (by usage – NOT Category)
1. Acute short-term & service driven – high mark-up
2. Chronic long-term product driven – low mark-up + service
Simplify, simplify, simplify.
• The most efficient stock control systems
are the simplest.
• Computer based stock control helps
enormously but is complicated in terms
of set up and maintenance and are not
infallible.
• Remember 80% of your stock control
comes from 20% of your stock holding.

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24 drugs = 80% usage
Simplify, simplify, simplify.
 Step 1: simplify the stock list - purge
redundant/unused items
 Step 2: de-stock low turnover items (specials)
 Step 3: reduce replicated products e.g. ear
preps, flea control, etc. This means getting
the vets to discuss and decide protocols…!
Need Protocols for….
• Thyroid
• Diabetes
• Gastro-intestinal
• Coughing
• Cardiac
• Skin…
• etc
• Vaccination
• Worming
• Fleas
• Ears
• Eyes
• Skin
• Teeth
Procedures AND Products

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Ordering cycles
Stock Turns = product ‘turned over per year’
• Annual usage / 12 = monthly
• Annual Usage / 50 = weekly
• Annual Usage / 4 = quarterly (for deals)

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Ordering cycles:
1. Daily/Weekly ordering process for critical
items and special orders.
2. Monthly ordering process for the majority of
stock items
3. Quarterly Review process to adjust for
• seasonal products
• treatment protocol changes and
• the introduction of new products
• ‘deals’ from the drug suppliers

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Control Dispensing.
1. Uncontrolled dispensing of stock
particularly in equine/large animal and
OOH situations plays havoc with stock
control and invoicing.
2. Clear protocols and systems to manage
dispensing to vets and clients is an
essential discipline to improve efficiency
and profitability.
Stock Tasks for Inventory Manager
Mark ups – by Category:
• 30% - OTC, chews, muzzles, leads etc
• 40% - Lifestyle & Rx diets & dental
• 50% - chronic medication and GSL’s
• 66% - Flea and Wormer treatments
• 150% - routine clinical drugs
• 200% acute / emergency / special
clinical drugs
Stock Tasks for Inventory Manager
• Dispensing fees – ensure all are present
and correct
• VAT – ensure all are present and correct
• Pack sizes, names of products etc,
ensure all are correct
• Alerts – put on alerts for off-license
medications, items not to keep in stock etc
• Deleted products that you do not use
anymore

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Stock Tasks for Inventory Manager
• Drug protocols, unauthorised, off-licence documents -
attached to relevant products to either attach or print off
at the point of sale.
• Vaccine batch recording and automatic re-ordering
– keep stock levels down and
– ensure vaccines are constantly in stock,
– permanently add the batch numbers to the clinical record.
• Off license products on the shelf and removed from
stock
Stock Tasks for Inventory Manager
• Vets’ meeting to discuss
– protocols use of products
– which drugs to keep in stock,
– which drugs to use up and
– which not to re-order/stock e.g. flea products, ear
preps, antibiotics, anti-inflammatories, etc.
• Staff meeting to communicate decision on drug
stock and stock levels
• Look at charity accounts CPL, PDSA, GDBA,
RSPCA. etc. - altered pricing structure on
computer and updated prices accordingly
5 steps in gaining and retaining
control of stock management
1. Take control.
2. Know your figures: ‘If you can’t measure it you can’t
manage it!’
3. Simplify, simplify, simplify.
4. Ordering cycles.
5. Control Dispensing.