Inventory is a veterinary practice’s second-largest expense after payroll, and the most consistently mismanaged one — carrying costs run 30–40% too high in many practices, tied up in overstock, expiry, and shrinkage nobody measures. A new practice gets to skip the bad habits entirely: install the system with the first order and inventory stays a controlled cost instead of a slow leak. Here’s the system.
The numbers that define “under control”
- Stock depth: two to three weeks of product on hand — not the quarter’s worth the opening-order adrenaline suggests. Your distributor delivers weekly; your shelf is not a warehouse.
- Turnover: the ideal is 10–12 turns per year; typical practices run 6–8. Below 6, cash is sleeping on shelves and expiring; track it quarterly from the start.
- COGS as % of revenue: hold the line near ~20% and investigate drift (see the KPI guide). Watch the invisible half: non-itemized consumables — syringes, gauze, gloves — can quietly make up around half of total COGS, so they need par levels too, not just the pharmacy.
Par levels and reorder points: the engine
For every stocked item, two numbers: a reorder point (when to buy — minimum stock based on usage rate and supplier turnaround) and an order-up-to level (how much). The mechanics: reorder point ≈ (weekly usage × lead time in weeks) + a small safety buffer. Set conservative initial values from your opening formulary (see the pharmacy-stocking guide), then let 90 days of PIMS dispensing data recalibrate everything — the data-driven reset is the single biggest step-change in inventory cost most practices ever experience, and a new practice can take it in month four. Prerequisite: the data has to exist. Quantity-on-hand updated with every order received, and every sale flowing through the PIMS — charge capture and inventory accuracy are the same discipline wearing two hats.
Weight the effort: ABC analysis
Not all SKUs deserve equal attention. Class A — roughly 20% of items driving 80% of inventory revenue — gets tight controls and monthly (or weekly) counts; middle-tier items get routine monitoring; the long tail gets less. Your parasiticide lines, top NSAIDs, and vaccines are A-items; the ophthalmic stain is not. This is also your counting schedule: cycle counting — highest-value and fastest movers weekly, the rest rotating — beats the annual mega-count, catching discrepancies while they’re small.
Shrinkage: measure it before it measures you
Shrinkage — loss from theft, miscounting, and damage — thrives on the gap between what the system says and what the shelf holds. The controls, all cheap at startup: FIFO shelving so oldest stock sells first · expiry-date checks folded into cycle counts · receiving discipline (count deliveries against invoices, not packing slips) · one named inventory owner (a trained tech or the practice manager — with dedicated hours, because “everyone’s job” is how it becomes no one’s) · and separation between whoever orders and whoever reconciles, the same principle as your financial controls (see the embezzlement-prevention guide). Controlled substances run under their own stricter regime (see that guide).
The weekly rhythm
One order day per week, driven by the reorder report, placed with your primary distributor (and price-checked at the second house — see the negotiation guide) · receiving same-day with QOH updates · cycle count of the week’s assigned category · a monthly 15-minute review: turnover, COGS%, expiry write-offs, rebate progress. That’s the whole system — perhaps three staff-hours a week — and it’s worth five figures a year against the alternative: reactive ordering, quarter-stocked shelves of slow movers, and the annual discovery of a drawer full of expired inventory that was cash the whole time. Sources: Inventory Ally — Practical Guide to Veterinary Inventory Management · IDEXX — Veterinary Inventory Management Tips · Covetrus — 10 Best Inventory Management Practices · ezyVet — Complete Guide to Veterinary Inventory · Epicur Pharma — 7 Best Practices for Inventory Management · AAHA Trends — Taking Stock