Let’s be honest, “inventory management” is probably not the phrase that gets your heart racing when you think about veterinary medicine. It’s often a thankless, time-consuming task that feels like a necessary evil. The endless cycle of counting, ordering, and tracking products can feel like a chaotic mess of spreadsheets, clipboards, and last-minute scrambles.
But what if we told you that mastering your inventory is one of the single most powerful things you can do for your clinic’s profitability, efficiency, and even quality of patient care?
The average veterinary practice carries between $50,000 and $150,000 in inventory at any given moment. That’s not revenue. That’s capital sitting on shelves, waiting to be used or expire.
And most practices have no real idea what they actually have.
Consider a clinic carrying $85,000 in inventory. With better tracking, that same clinic might discover it could operate just as effectively with $55,000. That’s $30,000 in cash that could be freed up for equipment, staff development, or debt reduction.
But inventory isn’t just sitting there passively. It’s actively costing money. Storage space, insurance, expiration, damage, shrinkage… Industry estimates suggest veterinary practices spend 20-30% of their inventory’s value annually just to maintain it. On $85,000, that’s over $21,000 a year.
Most veterinarians didn’t get into this profession to manage spreadsheets. They’re wired to treat, not tally. Nobody opens a practice dreaming about inventory management. So practices handle the urgent and defer the important. That dog needs surgery now. That cat needs bloodwork now. The inventory? That can wait.
The problem compounds because veterinary clinics aren’t retail businesses. Products might be dispensed to clients, used during procedures, given as samples, or administered during treatment. Each pathway requires different tracking. Miss one, and the counts are off.
Add the sheer variety—500-800 SKUs for small clinics, 2,000+ for larger practices—each with its own supplier, ordering minimums, lead time, and expiration considerations. And the stakes are higher: running out of the medication a critical patient needs isn’t just inconvenient.
Inventory turnover measures how many times per year a veterinary practice completely sells and replaces its stock. This is your key performance indicator.
A clinic with $50,000 in inventory and $500,000 in annual cost of goods sold is turning inventory 10 times a year—healthy for veterinary practices.
But if that same clinic carries $100,000 in inventory with the same COGS, it’s only turning inventory 5 times. Half as efficient. Twice as much capital is tied up.
Higher turnover rates aren’t always better. Excessively high turnover might indicate frequent stockouts and lost sales opportunities. Too low, and capital is unnecessarily tied up with increased risk of expiration and waste.
Most successful practices aim for 8-12 turns per year. Yet most practices have no idea what their number is because calculating turnover requires knowing both COGS and average inventory value accurately. And that requires actual tracking.
Veterinary clinics face unique inventory challenges, from unpredictable case loads to hundreds (sometimes thousands) of SKUs, varying expiry dates, and inconsistent supplier terms. But by applying tried-and-true inventory principles adapted from the retail and human medical industries, clinics can take back control.
Here are several best practices that modern veterinary practices can implement today:
If everyone “kind of helps,” no one’s truly responsible. Inventory must be someone’s actual responsibility. Designate an inventory manager with clear authority and accountability.
Not all inventory deserves equal attention. The ABC classification method categorizes items based on their value contribution:
| Category | Class A (Red) | Class B (Yellow) | Class C (Green) |
| Priority | Never run out | Lower priority but important | Order as needed |
| % of Inventory Items | 20% | 30% | 50% |
| % of Revenue | 70-80% | 15-20% | 5-10% |
| Control Level | Strict control | Moderate control | Minimal control |
| Count Frequency | Weekly | Monthly or quarterly | Quarterly or semi-annually |
| Examples | Specialty drugs, vaccines, flea/deworming products, NSAIDs, antibiotics | Prescription diets, chronic medications | Cotton balls, gauze, urine sampling kits, blood transfusion sets |
This classification helps reduce shrinkage and over-ordering while ensuring mission-critical items are always available.
To categorize your inventory, run a 12-month sales report from your practice management software to account for seasonal variations. Color-code physical products with stickers or labels so staff can quickly identify and prioritize critical items.
Even with digital systems, periodic physical verification remains essential. High-value items warrant monthly counts. Comprehensive audits should occur quarterly or semi-annually.
Discrepancies between physical counts and system records signal problems, whether theft, administrative errors, or unrecorded damage. Track patterns to identify root causes.
Once solid processes are in place, technology multiplies effectiveness.
Today’s veterinary Practice Management Systems integrate inventory directly into clinical workflows, automatically updating stock levels as products are used.
The key differentiator of modern PIMS is real-time tracking. When a technician dispenses medication during an appointment, inventory decrements immediately. When products are added during receiving, quantities update instantly. This eliminates the lag time inherent in manual systems where today’s decisions rely on yesterday’s data.
Barcode scanning eliminates manual entry errors. When shipments arrive, staff scan items directly into inventory faster, more accurately, and less tediously. In Digitail, setting up barcodes is straightforward: associate unique codes to products in the Product Directory, then scan instead of typing for receiving, checkout, or dispensing.
Modern inventory reporting transforms data into actionable insights. Digitail’s Stock Movement Report tracks:
Filter by category, AAHA codes, supplier, or date range. Export to Excel for custom analysis.
For example, a clinic might discover through reporting that they’re ordering surgical gloves weekly in small quantities, paying premium prices for rush shipping. Switching to monthly orders and negotiating better prices could reduce costs by 30% or more, with no change in actual usage.
While tracking is essential, optimization requires intelligence. Specialized inventory management tools that integrate with practice management software analyze order history and sales velocity to create dynamic reorder recommendations based on actual usage patterns.
Digitail’s integration with Inventory Ally combines order history and sales data for accurate, data-driven inventory management. Rather than relying on static par levels that may be outdated, the system continuously adjusts based on usage patterns. It provides critical insights into KPIs including:
The system prioritizes items based on value and sales volume, providing precise recommendations on what to order and in what quantities, saving time and resources while optimizing inventory costs.
This type of analysis can reveal patterns invisible to manual management, such as carrying multiple similar antibiotics when one or two would suffice. Identifying and cutting such redundancy frees up both cash and shelf space.
When practices implement proper inventory management, the financial impact shows up quickly:
The principle is straightforward: practices can’t manage what they can’t track. In veterinary medicine, where margins are tight and competition intensifies, invisible inventory costs represent an entirely solvable error.
The practices thriving today treat inventory management as a core competency. They measure what matters, implement proven practices, and leverage technology to gain visibility and control.
Every practice’s inventory is already telling a story about efficiency and profitability. The only question is whether anyone is listening.
From appointments to invoicing, Digitail centralizes everything in one easy-to-use platform. Built for modern veterinary practices, trusted by growing teams. Schedule a personalized demo and discover why more clinics are choosing Digitail.
