Overstocked? Over budget? Maybe It’s Time to Track Consumption

by | Jan 27, 2020 | Blog Posts

pharmacist with notebook and pen checking inventory

Overstocked? Over budget? Expired products? Missing inventory? Stock-outs? Just a few pieces of every materials manager’s worst nightmare. And a few of the issues your organization faces when usage isn’t tracked.

While it might feel like an extra step, tracking usage (or “consumption”) provides critical information that helps better manage your supply chain. Some quick examples of where you’ll see improvement include accurately maintained perpetual inventory, reduction of on-hand supplies, and tracking of lot, serial numbers and expiration dates.

If you’re not yet tracking item usage, here are 4 areas with action items to help you start today. And if you ARE tracking, see how you score against this checklist:

1. Align supply areas and processes for the greatest efficiency

  • Review how storage areas are organized, how products are pulled, identify each item and how you’ll scan it out, i.e., eaches, boxes, etc.
  • Using bins? Right size them by item. Overly large bins can appear as if supplies are too low
  • Set up barcode labels for every item you plan to scan

2. Target high dollar items, then move to track all supplies

  • Prioritize tracking high dollar items; in turn, you’ll gain visibility to a high percentage of your supply spend
  • With high dollar items being managed, take steps to increase visibility to overall consumption

– Scan items as they are pulled from inventory and distributed to supply areas

– Keep item tracking quick and simple for clinicians (think 2-Bin if you have areas with high usage of low cost supplies)

– If you’re an Envi user, you can easily record supply scans and track for replenishment

Note: Items pulled for preference cards should be scanned at the end of the case for accurate tracking.

3. Set auto-PO processes to avoid stock-outs and rush shipments

  • Usage tracking provides better usage data over time, helping set or correct par levels
  • Armed with accurate data, you can set up auto-order POs and maintain the inventory you need – without over-ordering or overstocking

4. Establish reporting processes to support specific areas of your business, such as cost accounting

  • Tracking consumption data increases your ability to perform various analytics, such as cost by physician, patient or day
  • Envi users access reports that track costs, margins and profitability by service line or department
  • Increase revenue and accuracy in patient billing by identifying billable items

Note: If your organization receives items in as assets, you’ll need to recognize them as expense items as they’re consumed. Usage tracking helps support this process.

Usage tracking helps your organization maintain perpetual inventory, reduce on-hand supplies, and track lot, serial numbers and expiration dates. When you improve the management of inventory and item consumption, you’ll reduce cost, supply loss and waste, and increase cash flow and revenue.