Guest Post: How Distributors Can Meet Consigned Inventory Cost-Reduction Targets
With the volatile supply chains sparked by COVID-19, many distributors were forced to thoroughly analyze inventory levels and reduce expenses ...Read Post
With more than $30,000 to $40,000 in inventory typically on hand at each of three offices in southeastern Pennsylvania, Smilebuilderz, a provider of orthodontic, periodontic, endodontic, oral surgery, and general dental services, found controlling inventory and containing costs to be an ongoing challenge.
Smilebuilderz’s inventory comes from multiple suppliers and includes everything from gloves and floss to the controlled substances that block pain during oral surgery. Items within that inventory are used by multiple departments and may be housed at any or all of the thriving practice’s three locations, said Joe Romero, Smilebuilderz’ Procurement and Project Manager.
Romero knew the practice needed a more precise picture of inventory, including processes and controls, as well as greater insight into optimal inventory levels for various items. And they needed to control costs. “Our question was: ‘Are we carrying too much of the wrong product? Are we not carrying enough of the product we need?’ So that’s where we started. We needed live accurate data to reduce costs and have greater inventory control.”
It was during that search that a representative of health care products distributor Henry Schein, Inc., brought up the subject of inventory systems. “He asked me point blank, ‘Are you happy with your current replenishment software? Are you getting enough data? Is it efficient?’ To all those questions, I answered, ‘No, no, and no,’“ Romero said.
The representative specifically recommended eTurns’ TrackStock system, and described its features, including automated procurement and inventory management processes.
The representative’s endorsement was enthusiastic, and Romero was intrigued – but cautious. "I needed the ability to streamline our ordering, tracking, and replenishment process, and have all the information across three locations, and data from 20+ vendors accessible from a single application," Romero said.
There was good news: Providing the ability to replenish inventory from multiple suppliers is a linchpin of the eTurns system.
In the first months after implementing TrackStock, Smilebuilderz’ inventory controller reported that the eTurns system enabled her to decrease by 70 percent the time she spent counting, cataloging, categorizing and maintaining inventory. That frees her to do other work, including fine-tuning the practice’s use of the eTurns dashboard.
eTurns gave them the ability to improve inventory optimization by doing weekly, monthly, quarterly, and six-month counts based on item usage. The company could never do that before eTurns. Previously, inventory counts meant creating multiple spreadsheets, hand counting, hand calculating, Romero said. None of that is necessary any longer as they quickly scan all the items with the TrackStock mobile app and it records location, supplier, package quantity, etc. As a result, “I don’t need as many people to do it, and I don’t pay overtime.”
Because of the varied inventory Smilebuilderz carries, Romero said the practice needed to be able to generate customized inventory reports. Whereas their old software could only deliver canned reports, he appreciated eTurns TrackStock’s user-defined fields that allow him to assign inventory to cost centers, departments or order cycles. While the old software could only assign inventory to one location, eTurns could assign inventory to a drawer within a shelf within a cabinet within a room.
Romero’s training consisted of learning to read, understand and take advantage of the metrics the eTurns system provided. His staff merely needed to gain an understanding of how to track inventory, create an order, and then receive that order. Because the eTurns system is logical and easy to use, Romero said it took only about four hours of training for his staff to do that.
Romero said he and the office manager were impressed with how smoothly implementation of the new eTurns TrackStock system proceeded, and they quickly gained confidence that TrackStock was providing the capabilities Smilebuilderz had been looking for.
With its old system, Romero often had to call multiple departments or offices to track down the origin of an order from among more than 20 or so vendors.
“Now, I can log in and get that information immediately, which I could not do before,” he said.
The new system also has been particularly helpful in tracking controlled substances. “With controlled substances, you really need to understand exactly what’s coming in and going out. We did not have that before,” Romero said. With eTurns, Smilebuilderz can precisely track the arrival, usage and storage of all medications.
With all items in the practice’s massive inventory, Romero now can adjust levels to better reflect actual usage and need. “That has been one of my favorite tools,” he said. “With eTurns, we understand our usage, it calculates your minimum and maximum, and then you can adjust your range as far as where you want to be, and do that across multiple items. That is big. I could not make a change in inventory levels across multiple SKUs with our previous software.”
“We can now with the eTurns dashboard get one glance that tells us if we are at optimization. We see now a lot of areas where we aren’t at optimization and visually I can see that there is cost reduction very soon down the road.”
Romero said he is confident that Smilebuilderz is realizing significant monetary savings, both in labor costs and in more targeted inventory spending. His next focus: assessing its seasonal fluctuations in inventory needs, another benefit of the eTurns system.