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John Marvin

Maintaining a High Performance Inventory

Take this path to big dividends and large profits.

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IT’S NOT UNCOMMON for optometry practices to manage their frame inventory using a stock ordering system. This means that opticians sell the frames off the board leaving a need for replacing an empty space. If they have undisplayed frames, they will take the “under-stock” and put it in the empty space. This process continues until the frame rep visits to place a replenishment order.

It is also not uncommon for frame stock to “creep” into inventories that lack variety and fluctuate in value over time.

It is estimated that at least 50 percent of most private practice inventories turn one or less times a year (a turn is a sale). Only about 25 to 30 percent turn more than three times a year.

If a private optometry office has an inventory of 1,000 frames, then only about 250 to 300 are turning enough to generate profits. Another 50 percent hardly turn at all. This happens year after year.

Many optometry dispensaries have too many frames because they carry too many brands from too many manufacturers. A brand should have a minimum of 40 pieces to be properly merchandised. If you like a brand, then make a commitment to it.

Don’t purchase 18 pieces to “see how it will sell.” This is often done and when repeated over many months results in having 30 or 40 brands in inventory.

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Limiting your number of manufacturers has several benefits. One is that you’re now important to that manufacturer; purchasing three or four brands each with 40 pieces gives you power. You’ll be able to negotiate unconventional exchange provisions, free shipping, better pricing (because you’re purchasing more). Selecting the right vendors is an important decision and should not be done casually.

You’ll want to know the sales representative but also their management. Make sure they have a large enough portfolio of brands that you can select more than one to display. Discuss up front your expectations on exchange policies, pricing and close out opportunities. It is your business and they should accommodate you, not force you to work on their terms.

An effective display and presentation of inventory should look like this:

  • A total of 800 frames in inventory
  • A total of 20 brands, each with 40 pieces
  • The 20 brands should be from no more than three or four manufacturers if possible

This inventory is a “display only” and opticians place an order for the frame the day it is sold. If the office finishes in-office, the frame is shipped directly to the office. If it will be finished at a lab, then the frame is drop shipped directly to the lab.

Using a computerized inventory enables an office to produce a daily, weekly and monthly report of the highest selling frames they carry. By not selling “off the board” these high selling frames are available every day for patients and customers to purchase.

When your sales reps visit the office, the report of their brands will show which frames should be exchanged due of lack of sales which continually optimizes the appeal of the frame inventory.

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Using this approach increases the turn rate of a large portion of your inventory and doesn’t limit profit generated thanks to the ever-increasing customer appeal of your frame display.

If a brand consistently doesn’t perform, replace it all together with another brand, preferably one from the same manufacturer. If that’s not feasible, replace it with a brand from one of your other manufacturers.

By ordering frames each day from fewer manufacturers, they’ll gladly provide free shipping because they’re shipping several at once.

You will also receive smaller invoices more frequently which are much easier to manage from a cash flow perspective. Large orders placed by frame representative to restock openings in the display create large invoices they expect to be promptly paid.

This approach to managing your inventory creates a high performing optical paying you big dividends and large profits.

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John D. Marvin has more than 25 years of experience in the ophthalmic and optometric practice industry. He is the president of Texas State Optical and writes about marketing, management and education at the practiceprinciples.net blog. You can email him at jdmarvin@tso.com.

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John Marvin

Forget Opinions, Measure the Hard Facts and Data to Improve Your Business

In the end, it is the least expensive and most productive business tool in your arsenal.

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THERE’S A BUSINESS axiom that says if you want to improve something, measure it. The sheer act of quantifying an issue and then determining how to improve its outcome incrementally, will itself create improvement.

W. Edwards Deming, the father of continuous quality improvement, believed that management decisions should be made using facts and data; and that successful managers use that data to best understand customers and their ever-changing expectations of goods and services.

The contrast is making decisions based on opinion. I believe that this is done far too often by optometrists and managers in our industry and these are the reasons why:

It’s easy. What could be more comfortable than offering your opinion about patients’ preferences and behaviors? In some ways, it just makes sense. You spend all day, several days a week observing people in your practice. Naturally, your opinion is enough on which to base your decisions.

It’s popular. Everyone has an opinion. The dilemma is when team members’ views conflict with one another. Whose opinion is correct? Usually, it defaults to the person with the most authority. When this happens, you can diminish the perspective of others.

It’s cheap. Opinions are free. You don’t need to go to the expense of both time and money to gather facts and data. Why go to all of that time, effort and spend money when your opinion will do the job just fine? However, a decision based on belief and not facts can be the most expensive decision you’ve ever made.

Recently, I was working with a young optometrist to open his first practice, and as you can imagine, he was full of enthusiasm and confidence in his opinions. He had classmates that had started new practices. What could be so difficult?

Of course, he had an opinion about his location. He had already determined where he wanted to open his new office. When I pointed out some of the challenges this selection would create, he wouldn’t be dissuaded. It had everything he believed, in his opinion, that was critical to a successful location.

It was close to where he wanted to live. It was half the price of locations in areas with much higher traffic patterns, and there were no other optometrists within a five-mile area. In his opinion, this location was ideal.

I explained to him that selecting the right location is probably the most critical first step in building a successful practice. That he should consider the households in the area, the exposure that a site will provide his new office, and that is all a part of what you pay for in lease payments. Basing this decision on his opinion is an example of how expensive a wrong decision can be.

Another practice data area that is neglected is the retention of patients. We don’t measure the percentage of patients we saw a year ago that return in twelve months. Why would we? We are great at what we do, why wouldn’t they return?

After all, we sent them a postcard telling them it was time to come back for an appointment.

The office most successful at retaining patients that I know measures and reports to the team each week the percentage of recalled patients who booked an appointment. They have learned that success in this area requires a phone call to follow up on those who do not respond to their postcards, emails, and text messages. The OD/owner is proud that 87.3 percent of their recalled patients return for their annual exam and he is still working on improving this percentage.

Managing your business using facts and data is crucial. It takes the emotions, personal perspectives, and biases out of making improvements. In the end, it is the least expensive and most productive business tool in your arsenal.

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John Marvin

The 4 Key Elements to Building a High Performance Team

It isn’t experience, skills or talent… it’s all in the mindset.

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MANY PEOPLE BELIEVE that the New Zealand All Blacks Rugby team is the greatest team in the history of sports. This means all sports, any team all over the world. They are three time world champions and have a winning percentage of 77 percent over the past 100 years. They have not lost at home in the past 10 years.

What is it that creates a high performance team? It is not merely talent. There are many professional sports teams with a roster full of superstars, but which do not live up to their potential. It is not the money invested in payroll; the New York Yankees have famously spent far more money than other teams but often fall short of even making the playoffs. The 2008 World Series Tampa Bay Rays had the 29th payroll ranking out of 32 teams.

When you break it down, all high-performing teams have certain traits in common:

Shared Leadership

A team that reaches toward its full potential does not rely on one person for leadership. Each member of the team steps up when required to provide leadership. Each member respects the talents and abilities of other team members and follows another when the job requires.

Leadership in difficult situations requires different skills, and a high-performing team recognizes that each member brings their own talents and skills.

An Achievement Mindset

High-performing teams are focused on accomplishment. They are unified toward reaching their goal, be it winning a championship or hitting a sales target. They understand that accomplishment is not a once in a while endeavor, but the result of habits executed consistently each hour of each day. They don’t understand or accept the concept of close enough. Successful teams take the view that either they got the job done or they didn’t. Failure to them is not an option; they figure out a way to make success happen.

Integrity and Respect

High-performing teams believe in the dignity of each team member. They perform their responsibilities with honesty and integrity. They know that cutting corners when offering a service is not good for the customer or the practice. If a mistake has been made, they own it. They don’t make excuses or blame the customer. They truly believe that while the customer isn’t always right, they are always the customer. They do not encourage or tolerate team members who do not live up to the same standards of integrity.

High-performing teams respect each other by listening and considering the views of others. When faced with a challenge, they work together instead of believing that they alone have all the answers. They understand that collaboration among many can produce a better result than the opinion of one individual.

Look for Opportunities

High-performing teams are continually working to improve their skills, their services, their products and their processes for delivery. They foster an environment of continual training, understanding that it is the excellence of consistent execution that delivers to the customer.

They encourage learning of new technology, new products and an ongoing review of how the work flow process can be improved. They don’t believe in “if it ain’t broke, don’t fix it.” To the contrary, they believe that they must break it to see how they can make it better.

Developing a high-performance team requires selecting team members with the right mindset. This mindset is more important than years of optical experience or years in a particular position. The owner or hiring manager’s job, in many ways, is to select the right people, give them direction and then get out of their way.

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John Marvin

Leading with Honesty and Authenticity Even When You Don’t Know What You’re Doing

It is OK not to know everything, but it is not OK to remain ignorant.

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OWNING AN OPTOMETRY practice with retail is a multi-faceted responsibility. First, you have a full-time job as a clinician and generator of revenue. Second, you have a full-time responsibility to manage the business and lead your employees. It’s easy to avoid any responsibility you don’t enjoy, and most doctors don’t enjoy managing a business. So, what are you supposed to do?

Running a business takes leadership. There’s a myth that leaders know all the answers. In John C. Maxwell’s The 21 Irrefutable Laws Of Leadership, Law #2 is The Law of Influence: “The true measure of leadership is influence, nothing more, nothing less.”

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As the owner, people look to you for leadership. They expect you to know what you’re doing. What happens when you don’t? “Fake it until you make it?” Terrible advice. People don’t react well when they believe you are dishonest and inauthentic. If you are dishonest, it tells your staff that dishonesty is okay in your business. Here are some ways to maintain your influence, even when you don’t know what to do or have all the answers:

Relax and Investigate

It’s OK not to know everything. No one does. It’s not OK to remain ignorant. In today’s connected world, you can learn anything you need to know. Think of your practice as a DYI project. There are YouTube channels, chat boards and forums on management and small business ownership, and countless articles on personnel, inventory, sales, accounting, management, and leadership. Write out a development plan using your calendar. Growing business and leadership skills takes constant education. You didn’t learn optometry in your first semester.

Network with Others

I often say others have done some of my best thinking. Seek out people who can teach you the skills to run your business. There are hundreds of networking opportunities for small business owners. There are organizations you can join, like Small Business Administration Community Groups. You can learn about all of the resources the SBA offers through a local office. One of their most valuable resources is SCORE, a completely free, country-wide network of business mentors. Experience is not the best teacher; other peoples’ experience is the best teacher.

Learn from Yourself

Experience is a good teacher if you learn from it. When a decision goes well, think about why it was successful. I strongly suggest keeping a journal of your ideas, experiences and decisions. Sue Forrest has written a great article on Journaling for Small Business Owners. You can read it in her blog at sueforrestagency.com.

Make Time to Learn

The most important step you can take in becoming a successful manager and leader is to plan. You wouldn’t try to see patients without a schedule, why are you running your business without one? Set aside at least eight hours a week dedicated to the business of your business: No patients, just the operational aspects. You can break it into two four-hour sessions or dedicate a full day. This is when you should plan meetings with vendors, interview applicants, review financials, read business articles, network in your community. Eight hours out of a 50-hour week is only about 15 percent of your time. And if you’re not willing to commit at least 50 hours a week to your practice, chances are, you shouldn’t be an owner. That could be a valuable thing to learn.

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