Discerning the Efficiency Level of Your Optical Dispensary
When discerning the efficiency level that your optical dispensary should be operating at, you may not know where to start. And while you may find that you are turning a profit as your dispensary works on autopilot, you still need to perform reassessments on your inventory on a regular basis. You very well may find that altering your inventory can actually save you money and increase your profit margins. For now, let’s take a quick look at three must-follow tips for maintaining the appropriate level of inventory in order to reduce unnecessary overhead costs, but maintain a balanced, manageable and marketable selection of frames at the same time.
You very well may find that altering your inventory can actually save you money and increase your profit margins.
Tip #1: Find the Goldilocks’ Zone
All dispensaries have a Goldilock’s Zone; this is the ideal dispensary size that keeps inventory full but not overstocked. This Goldilocks’ Zone is pertinent because it helps reduce overhead costs. How do you determine your Goldilocks’ Zone? It’s actually not as difficult as you might think. First, you will take the number of your annual refractions and times it by .65; this allows you to calculate a capture rate of 65 percent. Now, take the capture rate and divide by three; this result will be a representation of the minimal acceptable unit turn rate. This number is the number of units you should have in your dispensary at all times.
Tip #2: Understand the Pitfalls
If your dispensary drops below the minimum number of frames to keep on hand, or if you have excess inventory, this can lead to a loss of money. For most dispensaries, there is too much inventory on hand at any given time, which is far more costly than not having enough. How does excess inventory cost money? Here are three main ways:
- Leads to wasted time
- Causes complications with vendor negotiations
- Increases costly returns
Tip #3: Be Picky In Your Displays
You don’t want too much inventory on hand at any given time, but you don’t want your customers to feel as if they are limited in regard to the frames you are offering. One way to ensure they don’t feel this way is by being picky with your displays. Don’t stuff all your frames into only one or two displays. Instead, make sure they are spread out over four to five displays, and preferably, these displays will be made of glass because this makes your inventory look larger.
Your frame inventory is one of the biggest expenses you have as an eye care provider. Ideally, you will want to do a standard inventory split of 85/15 — 85 percent standard frames and 15 percent sun wear. With proper inventory management, you can increase profit margins and enhance patient satisfaction by providing them with a quality selection of frames to choose from.
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