For optometrists opening their own practice, inventory management could be the last thing you want to think about. It’s often the case that there is little to no training on how to best manage inventory for an optical practice and many are left to figure out on their own how to make it work. Here are six tips to get you started:
1. Understand your customer, trends, and needs
Choose products that fit within your consumer demographic. Though popular and classic products are always safe to have on hand because it has a track record of good performance, an understanding of the newest trends, styles, and designers are also equally important. Secondly make sure that the products being selected fit within the practice’s intended profit margins.
Correctly categorizing products around the store can help take customers down the selling cycle more efficiently. The best way to achieve this result is to segment by designers and brands, with further segmentation by type in the section. If segmentation is based on the style of frame, it can look like there is a limited selection due to the similarity of the styles.
3. Track and manage your product turn ratio
With only so much physical space available, packing your practice from floor to ceiling with frames is not only costly, but unnecessary. The reason why turn ratio is important is because it separates products based on what sells and what doesn’t. Turn radio is the frequency of sales and turnover in inventory. For optometry practices, frames that sell on average of twice a year have a good turn ratio. The goal is to get that rate even higher by using this information to inform future frame selections.
If your practice already has a large inventory or one that doesn’t seem to be moving, looking into scaling down your inventory may be the right move. By removing low performing inventory, you could increase not only your turn ratio, but also sales.
4. Increase your buying power
Building relationships with vendors that fit into your practice’s requirements is key to getting better deals and options. Start off by putting together a list of non-negotiables such as warranties, return policies, level of quality. These are must-haves that vendors need to meet in order to be considered.
For the vendors that meet your criteria, select 3-5 major suppliers and 1-2 specialty vendors to help increase your practice’s buying and negotiation power. From there build relationships with the vendors so that they’ll think of you first when things such as special offers and new products become available.
5. Track your inventory
Having a clear understanding of what is in stock, what needs to be reordered, and what products are (and are not) performing well is key to increasing your inventory’s ROI. Another advantage of having a line of sight to your inventory gives you the power to order frames based on what you need and not when vendors make the routine stop for new orders.
6. Product, Price, Placement, and Promotion
Those are the 4 Ps of marketing. We have already covered selecting winning products, but what about price, placement, and promotion? Price and placement go hand-in-hand. Place high-profit products at eye level, coupled with trendy lifestyle images, to the right part of the store.
For promotions, using traditional and digital methods such as ads, PPC, and displays can help bring customers further down the buyer’s journey by reaching them from the research to the ready-to-purchase phases.
Key takeaway: Being able to track and control inventory directly affects a practice’s bottom line.