Understanding Inventory Waste in Dental Practices
What is Inventory Waste?
Inventory waste in dental practices refers to the excess or unused stock of materials and supplies that do not add value to operations. This includes dental instruments, materials for procedures, office supplies, and pharmaceuticals that are overstocked or not utilized efficiently.
This topic is vast – so this article has been designed as an introduction and gateway to a number of other topics designed to help your practice. But before introducing the topics that help your practice – here is why you should care.
The Impact of Inventory Waste on Dental Practices – why is it important?
Financial Strain: Excess inventory ties up capital that could be better used elsewhere, such as investing in new technologies or expanding services. This affects cash flow, making it harder for practices to meet other financial obligations.
Storage Costs: Maintaining excess inventory requires additional storage space, which can lead to increased overhead costs. This can also mean paying for larger facilities than necessary.
Obsolescence and Expiration: Dental supplies and medications often have limited shelf lives. Overstocking can result in items expiring before they are used, leading to direct financial loss.
Inefficiency: Managing and organizing a surplus of supplies can be time-consuming and inefficient, diverting staff from more productive tasks.
Re-ordering More Than Necessary: A common issue is ordering 2-3 months' worth of stock because it's convenient. This practice ties up cash in inventory, which could be used for other essential activities or investments.
Methods for Managing Inventory Levels More Effectively
This is a very brief introduction of a number of elements you could think about.
Implementing FIFO: First in-First Out strategies is an easy and effective way to ensure that the stock with the shortest expiry date is used ahead of the stock delivery with longer expiry date (click here for in depth how-to).
Example: dental practice can order stock in, pull out old stock, and position it at the front. This will ensure that older stock is used before the new delivery.
Andon System: it is an effective and clear way to indicate whether an item is has good stock levels, whether it should be re-ordered or if it has reached it’s critical stock level. It’s a simple red-amber-green system that can be done inexpensively using electrical tape (click here for in depth how-to)
Example: dental practices can use electrical tape to clearly mark out the number the green-amber-red stock levels of their most critical items.
Implementing a Just-in-Time (JIT) System: This strategy involves keeping inventory levels low and ordering supplies as they are needed. It reduces storage costs and minimizes waste from expired items.
Example: Dental practices can schedule regular deliveries of consumables based on usage patterns, ensuring that supplies are always fresh and used efficiently. Click here to the full article.
Automated Inventory Management Systems: Using software to track inventory levels in real-time can help practices maintain optimal stock levels and avoid overbuying.
Example: Inventory management software can alert staff when stock levels are low, automatically reorder supplies, and track expiration dates. Click here to full article.
Vendor Managed Inventory (VMI): Partnering with suppliers to manage inventory levels can ensure that the right amount of stock is maintained without the practice needing to oversee every detail.
Example: Suppliers could monitor usage and deliver supplies for fast-moving inventory as needed, reducing the burden on dental staff to manage inventory. Click here for full articles.
ABC Analysis: Classifying inventory into three categories (A, B, and C) based on their importance and usage frequency helps prioritize management efforts.
Example: High-value items (A) require more stringent control, while low-cost, high-use items (C) can be ordered in larger quantities. Use historical data to predict future demand and classify stock accordingly. This reduces the likelihood of overstocking.
Conclusion
Effective inventory management is crucial for dental practices to maintain financial health and operational efficiency. By implementing strategies such as JIT, automated systems, regular audits, VMI, and ABC analysis, practices can reduce waste, improve cash flow, and ensure that resources are used optimally. Addressing the issue of over-ordering by aligning stock levels more closely with actual demand can free up capital and contribute to a more agile and financially stable practice.
