Ambulatory Businesses Making Inventory Management A Critical Success Factor
The following is an excerpt how ambulatory businesses were employing inventory management as a critical success factor to improve profits and cash flow by Robert Zasa .
What are Critical Success Factors
At the Sloan School of Management at MIT in Cambridge, Mass., research was done on how businesses were run successfully. Being a business school based at an institution strong in engineering, many of the factors were quantified. What resulted in the studies was a remarkably simple, yet powerful tool called "Critical Success Factors" (CSF). CSF should be measured in each business. The premise is that in any given endeavor, including a business, there are no more than a dozen factors that are critical to the success of that endeavor. In examining managers and businesses that had been very successful, those managers identified and focused their and their management team's efforts on the basic principles of the business.
Applying CSF to ambulatory businesses
Robert has applied CSF in five companies he has run, a 500-bed hospital with 95 different departments and eight satellite ambulatory centers, a division of public company, a separate public company and two private firms representing over 150 different ambulatory care businesses in 40 U.S. states. He has 10 factors for occupational medicine businesses that he has run, included in his plan is keeping inventory down.
"We want to keep the inventory down, and at all of our centers below 3,000 cases we try to keep the inventory below $100,000. Now with just-in-time inventory, we can actually do better than that. We make sure the nurse doesn't buy 15 boxes this month and then nothing the next month. Critical to our success is cash flow management. Inventory is key to this. I tell our nurses to think of the supplies in sterile storage as cash on the shelf. If it is on the shelf, neither the partners nor them can access it for bonuses, nor can I use it to invest in the business or buy more equipment for them. If you are only seeing 10-15 patients a day, and you have $50,000 on the shelf, you are using up the group's cash. Remember, "cash is king"."
RightOn Inventory Order Management is an easy way to have inventory levels at peak financial performance for your small business. Color coded business alerts make it easy to place purchase orders online in minutes - the right amount at the right time. Reorder points can be set electronically so that you do not run out.
What are Critical Success Factors
At the Sloan School of Management at MIT in Cambridge, Mass., research was done on how businesses were run successfully. Being a business school based at an institution strong in engineering, many of the factors were quantified. What resulted in the studies was a remarkably simple, yet powerful tool called "Critical Success Factors" (CSF). CSF should be measured in each business. The premise is that in any given endeavor, including a business, there are no more than a dozen factors that are critical to the success of that endeavor. In examining managers and businesses that had been very successful, those managers identified and focused their and their management team's efforts on the basic principles of the business.
Applying CSF to ambulatory businesses
Robert has applied CSF in five companies he has run, a 500-bed hospital with 95 different departments and eight satellite ambulatory centers, a division of public company, a separate public company and two private firms representing over 150 different ambulatory care businesses in 40 U.S. states. He has 10 factors for occupational medicine businesses that he has run, included in his plan is keeping inventory down.
"We want to keep the inventory down, and at all of our centers below 3,000 cases we try to keep the inventory below $100,000. Now with just-in-time inventory, we can actually do better than that. We make sure the nurse doesn't buy 15 boxes this month and then nothing the next month. Critical to our success is cash flow management. Inventory is key to this. I tell our nurses to think of the supplies in sterile storage as cash on the shelf. If it is on the shelf, neither the partners nor them can access it for bonuses, nor can I use it to invest in the business or buy more equipment for them. If you are only seeing 10-15 patients a day, and you have $50,000 on the shelf, you are using up the group's cash. Remember, "cash is king"."
RightOn Inventory Order Management is an easy way to have inventory levels at peak financial performance for your small business. Color coded business alerts make it easy to place purchase orders online in minutes - the right amount at the right time. Reorder points can be set electronically so that you do not run out.
Posted by RightOn Inventory at 10/19/2010 7:30 AM 
Categories: Inventory Management
Tags: QuickBooks order management inventory management reorder point purchase order
Categories: Inventory Management
Tags: QuickBooks order management inventory management reorder point purchase order
really helpful.
thanks for sharing this.
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