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Inventory Optimisation for healthcare practices


Healthcare practices face unique challenges when it comes to inventory. Just like most businesses, they need to make sure that the supply of products is high enough to meet the demand but not too high so as not to waste money on expiring items. However, unlike other industries, healthcare clinics also have a very specific timeline for which products can be used or disposed of (e.g., you can't store medicine after it expires). This means that there is an added element of risk involved in managing inventory in dental practices: if something goes wrong with your inventory system then patients will face unnecessary delays due to lack of supplies or even worse - have their treatment delayed because you don't have the right equipment!

Hidden inventory costs

You may know that there is a cost associated with carrying inventory, but you might not realize just how much that is. In fact, on average, inventory carrying costs ranges between 20% - 30% of average annual inventory cost.  And the average annual inventory cost for a well-run dentist practice should be below 6% of revenue.


Therefore for a medical practice with an annual revenue of, say $3 million, the inventory carrying cost would be around $36,000 – $54,000, at best.  If a medical practice overstocks on inventory, the average annual inventory cost will be much higher, and the inventory carrying costs will correspondingly be much higher.


Importance of managing expiry dates

Expiration dates are extremely important for patient safety and regulatory compliance. At the very least, you must be aware of how long each item in your inventory will last. If you don't track expiration dates effectively, then there is a significant risk that one day you'll dispense an expired product to a patient (who might get sick). 


Use of AI to better manage your inventory

Conventional ways of managing inventory typically include:

  • Keeping track of which products need replacing or reordering by manually counting stock levels

  • Using Excel spreadsheets to keep track of this information

  • Creating manual reports based on data contained in Excel files using formulas that calculate which products need replacing or reordering


This is not only time-consuming, but it also does not provide the requisite insights to help the practice to optimise its inventory level.


If you have a medical clinic and are looking for ways to improve your inventory management, artificial intelligence (AI), when applied to historical data on your clinic management system (CMS) can help by:

  • Ensuring adequate stock level at all times for all patients needs

  • Reducing probability of obsolescence/ expiry

  • Maximising bulk-purchase discounts from suppliers


This will bring about positive financial impact to your practice as follows:

  • Improved Profit Margin through reducing inventory carrying cost & enjoying appropriate discounts for bulk order

  • Improved Cash Conversion Cycle through unlocking valuable working capital trapped in inventory due to sub-optimal inventory turnover


An effective AI solution can help you manage your inventory more effectively, saving time and money in the process.



Inventory management is a complicated problem for medical practitioners, but often times neglected. Nonetheless, there’s a lot at stake and it can be difficult to know what to keep in stock and how much of it.  The solution is simple: you need an AI system that can learn your practice’s pattern of consumption and make appropriate decisions based on them.

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