Revenue cycle: Avoid the spiral

Q. How does inventory and warehouse management play a role in revenue cycle management?
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Tuesday, February 27, 2018

A. Too much inventory creates unneeded expenses and too little inventory means lost revenue. For many in our industry, inventory management is a necessary evil that isn’t done well. From my experience, many businesses find it challenging because too many inventory management systems have been weakly bolted on to billing systems. This weakness causes insecurity for the CSRs who feel the need to verify inventory numbers themselves when answering inquiries. Also, warehouse personnel can’t accurately forecast when to reorder so we end up with a downward spiral of inventory and an upward spiral of frustration.

What would it look like if inventory management was “just right?” Warehouse personnel would maintain optimal levels of inventory allowing CSRs to trust the quantities being shown and quickly respond to inquiries. Picking would be optimized by several tickets displaying on one handheld device so the employee only goes through the warehouse one time in order to fill several orders. Up-to-date sales history trends would assist with forecasting inventory and keeping carrier costs low. A “Goldilocks” scenario to be sure, but an excellent goal to strive for.

The right software solution will make sure the right people are doing the right work at the right time. The improvements in customer service and inventory forecasting will boost employee productivity, and reduce labor and carrying costs. You’ll have accurate reporting from inventory to sale and from dispensing to delivery. You’ll also have the data you need to make adjustments that will enable continued growth in your business. Carrying too much inventory is a cost against the bottom line – without inventory, there is no revenue to cycle. Having the correct balance of inventory is key to a healthy revenue cycle program.