5 Myths That Lead to Poor Inventory Management
Have you heard of Asclepius?
No, he's not one of the new resident physicians.
In Greek mythology, Asclepius is a hero and god of medicine. You might recognize one of his accessories: the rod of Asclepius, a snake-entangled staff. To this day it's a popular symbol for medicine and healing.
According to the ancient Greek myths, Asclepius traveled from town to town with a potion that contained magical properties. The potion, bestowed upon him by the goddess Athena, enabled him to perform miraculous cures - from healing pain to bringing people back from the dead.
Myths are fascinating, imaginative, and frequent in the realm of medicine. Today we're going to call out five of the most common inventory management myths and what you can do to avoid falling for them.
Myth #1) I have an ERP system. I don't need anything else.
Enterprise Resource Planning systems were originally designed for meeting the needs of manufacturing organizations. They're made for managing business needs and automating functions related to finance and technology. They're a costly investment, so supply chain executives are encouraged to adopt whatever supply chain model is offered within that specific ERP.
While successful at their core purpose, they are not designed with a focus on clinical inventory management. ERPs can also be increasingly complex to use for clinical inventory-related challenges.
An effective ERP system is key to a hospital's success, and we're not advocating that you abandon yours. Instead, opt to select software that's compatible alongside your ERP system. Go with a solution that's designed to meet your needs from the beginning, like the Z5 Inventory Count, Reallocate, Buy platform.
You don't have to keep trying to "make it work" with your ERP.
Myth #2) Inventory software is tough to install and time-consuming to roll out.
If you have been hesitant to explore alternative options to your status quo, fear not. Unlike EHR systems, which require armies of consultants and years to properly implement, the Z5 Count software is incredibly easy to deploy in both single- and multi-hospital healthcare systems.
To put things into perspective: in the time it would have taken you to prepare for and complete your next physical inventory using traditional methods, you could have already used Z5 Inventory to complete your count. With Z5, physical inventory can typically be taken in days versus weeks.
Don't let this myth hold you back from adopting a better method of calculating the value of your medical supply inventory. If you're looking for a solution that's easy to implement - and one that that delivers quick results - Z5 is your best bet.
Myth #3) Supply chain is at fault for my excess and expired inventory.
We agree - it's a fine balance between having the right medical supplies on hand for patients versus freeing up capital for other needs, but the responsibility doesn't fall 100% on supply chain management.
The problem often lies in outdated technology (like paper count sheets and Excel spreadsheets) and inefficient processes (supply hoarding), which, over time, can cause even the most diligent hospitals and healthcare systems to struggle. These are common culprits for overstocking, higher supply costs, and frustrated team members.
Embrace technology and processes that are going to support your efforts to count and manage your physical inventory, not derail them. Mere mortals only have so many hours in the day.
Bonus Myth #3, Part B) I don't have a large general ledger expense for expiring inventory during the year.
You probably have a lot more expiring inventory than you think. Chances are, the expired inventory is just not being recorded as a separate expense. In many periodic inventories (non-perpetual), expired inventory is removed without recording a general ledger transfer from the main supply expense account into an expired inventory account, burying the impact of expired product on the financial statements. There may not be a large general ledger expense for expired product, but if your supply cost per patient day is higher than benchmarks or you are consistently over budget, expired product may be the culprit.
Without the right tools, it's tough to identify, categorize, and liquidate expired inventory. With Z5, it's possible and actually easy to solve this problem.
Myth #4) I don't have excess inventory.
OK, that was harsh. Maybe you're in the 1% of hospitals that run that tight of a ship. If so, that's amazing. You're the Hercules of hospitals.
Unfortunately, the majority of hospitals and healthcare systems agree that excess, unused inventory exists, and they're mindful of the significant challenges that presents.
As more and more hospitals are realizing this - they're seeing there's an opportunity to save millions of dollars. The problem doesn't stem from recognizing that; it lies in the enormous challenge of identifying what is actually excess, unused inventory and then figuring out what to do with it.
Did you know Z5 can solve this problem for you?
Z5 uses advanced proprietary data analytics tools to compare your inventory count results with your purchase order history, then identify your excess, unused inventory. Afterwards, our software uses this data to show where your inventory should be reallocated to another location within your system.
Once your excess medical supply inventory is all identified, Z5 will make you an offer to buy any inventory that can't be reallocated internally. Our team is able to purchase a larger amount of this inventory than other medical supply purchasing companies, as we have already identified buyers within our network of hospitals and healthcare systems who currently use and need those products.
We're the only company offering a complete Count, Reallocate, Buy inventory solution.
Myth #5) There's no room in my budget for software that will help me identify and eliminate excess inventory.
Remember how we mentioned that we buy hospitals' excess, unused inventory?
For our customers, Z5 either helps you complete your physical inventory or works with your data from a previous count. Z5 offers to purchase your excess inventory and then writes you a check for it.
Z5 can fix your inventory-related challenges.
Just because Asclepius met with a tragic ending doesn't mean you're destined to the same fate.
Want to streamline your next physical inventory and get more accurate results?
Z5 Inventory's Count software saves customers 20-40% compared to traditional inventory methods - and that's no myth.
Need to identify and either reallocate or eliminate your excess, unused medical supply inventory?
Our platform will identify these items and produce an SKU-level report that details the exact product location down to the room, rack, and shelf. Z5 picks, packs, and ships product within days of the sale. Then you receive your check.
We're not doctors, but if your physical inventory is giving you a headache, we can fix it.
Click the orange button below to learn more.
About Z5 Inventory
Every organization in the healthcare industry struggles with inventory. So Z5 Inventory’s founders set out to solve the problem. Using our unique Count, Reallocate, Buy platform, Z5 Inventory can not only count your inventory, but turn the slow-moving and excess stock on your shelves into savings in your pocket.
Want to learn how much we can save you? Contact us.
Headline photo via Depositphotos.