Key Takeaways
Inventory is your practice’s second-largest expense after payroll. If you’re not actively managing it, it’s actively costing you money. Canadian practices purchase through fewer distributors than U.S. clinics, which creates both advantages and risks. Start with your highest-value products first, not everything at once. Group purchasing can significantly reduce your per-unit costs. And most importantly, if your inventory knowledge lives in one person’s head, you don’t have a system, you have a liability.
Why Inventory Management Matters More Than You Think
Here’s a scenario we see all the time: a practice owner opens the supply closet to grab a product they use daily and it’s not there. Hasn’t been there for a week. Nobody reordered. Meanwhile, there are four unopened boxes of something that barely moves sitting on the top shelf, slowly approaching expiry. Sound familiar?
Nobody goes to vet school thinking about inventory spreadsheets. But inventory is typically your second-largest expense after payroll, and the way you manage it directly impacts your cash flow, your COGS, and honestly, your team’s stress levels on a busy Tuesday afternoon.
Through over 180 in-hospital Practice Health Assessments across Canada, our operations team has consistently found that inventory management is one of the most common operational gaps in independent practices. Not because owners don’t care, but because it’s the thing that keeps getting pushed to tomorrow.
This guide is meant to give you a practical, Canadian-specific framework for getting your inventory under control, whether you’re starting from scratch or trying to fix a system that’s not quite working.
What Veterinary Inventory Actually Includes
When most people think about vet clinic inventory, they think about drugs. But your inventory is much broader than your pharmacy shelf. It includes:
Products dispensed to clients: Medications, diets, parasiticides, supplements
Items used during procedures: Surgical packs, sutures, anaesthetic agents, dental supplies
Consumables used in-house: Gloves, syringes, swabs, IV fluids, diagnostic test kits
Samples and promotional stock: Product from reps that still needs tracking
Each of these categories needs a different management approach. A box of Rimadyl that’s dispensed to a client shows up on your revenue line. A pack of 4×4 gauze used in surgery doesn’t. If you’re not tracking both, your PIMS data won’t match what’s actually on your shelves, and your COGS numbers won’t tell you the full story.
One thing worth noting for Canadian practices specifically: most of us purchase through 1-2 major distributors (CDMV, VPCL, WDDC, AVP). That’s a smaller supplier pool than what U.S. clinics deal with, which means less room to price-shop but also an opportunity to consolidate and negotiate more strategically.
ABC Analysis: Focus on What Actually Matters
If the idea of overhauling your entire inventory system feels overwhelming, don’t try to do it all at once. Start with what’s costing you the most.
ABC analysis is a simple prioritization method. You sort your inventory into three groups based on value:
A Items: Your top 10-20% of products by dollar value. These are the ones worth your close attention. Think high-cost injectables, certain surgical supplies, or your top-moving pharmaceuticals.
B Items: Mid-range. Important, but not where you’re going to find the biggest wins.
C Items: Low-cost, high-volume. Exam gloves, cotton balls, basic consumables. You need them, but you don’t need to count them weekly.
The point is this: your A items probably represent 70-80% of your inventory spend. That’s where pricing errors, overstock, and waste hurt the most. Get those right first.
This is something our operations team looks at during every practice assessment. You’d be surprised how many clinics are spending management time tracking low-cost items while their highest-value products are being reordered on gut feeling.
Setting Reorder Points and Par Levels
A reorder point is the minimum quantity of a product that should trigger a new order. It’s based on two things: how fast you use it and how long it takes to arrive.
A reasonable starting point for most products is a 2-week supply on hand. From there, adjust based on actual usage patterns. Some things to keep in mind:
Seasonal shifts matter. Flea and tick preventatives spike in spring. Dental supplies increase if your practice runs dental awareness months. If your reorder points are static year-round, you’ll either be short or sitting on excess.
Your PIMS should be helping you. Most modern practice management systems can set minimum stock levels and trigger reorder alerts. If yours can’t, or if your team isn’t using that feature, that’s a gap worth addressing.
Review quarterly, not once. Reorder points aren’t something you set during a slow week and forget about. Your product mix, patient volume, and supplier lead times all change. Build a quarterly check into your operations calendar.
Inventory Audits: Counting What Counts
There are three ways to approach inventory counts, and the best practices use a mix of all three:
Full physical count (annually): A comprehensive count of every item in the clinic. It’s time-consuming but necessary. Most practices do this at year-end.
Cycle counts (monthly or quarterly): Rotate through product categories on a schedule. This keeps your numbers current without shutting down the clinic for a full day.
Spot checks (weekly): Focused counts on controlled substances and high-value items. For compliance and loss prevention, controlled substances should be counted at minimum monthly.
One thing we always flag during our assessments: software-based inventory counts alone are not reliable. Missed charges, samples handed out, wasted or damaged product, expired items pulled from shelves, these all create discrepancies that only a physical count will catch. If the last time someone physically counted your stock was over a year ago, your PIMS data is almost certainly off.
When our operations team visits a practice, reconciling what’s physically on the shelf with what the system shows is one of the first things we evaluate. The gap between those two numbers tells us a lot about how the practice is running day to day.
How Group Purchasing Reduces Your Inventory Costs
If you’re an independently owned practice placing orders on your own, you’re likely paying more per unit than you need to be. That’s where group purchasing comes in.
A group purchasing organization (GPO) pools the buying volume of its member practices to negotiate rebates and discounts with suppliers. Because the group represents hundreds of clinics, it has leverage that an individual practice simply can’t match.
Through VetCircle’s Rewards Program, our members access negotiated deals from 85+ vetted vendor partners. Most practices that join earn 2-3X more in rebates compared to what they were receiving independently, from a single supplier alone.
Beyond rebates, there’s a strategic benefit to vendor consolidation. When you buy more from fewer suppliers, you often unlock tier-based savings and simplify your ordering process. Our team can run an inventory and accounts payable analysis to identify where consolidation could make sense for your practice specifically.
The takeaway: you don’t have to switch everything you buy. But understanding where your spend is going, and whether a buying group could improve your margins, is worth the conversation.
Build a System, Not a Dependency
Here’s a problem we see in a lot of independently owned clinics: one team member knows how everything gets ordered. They know the reps, the login for the distributor portal, the products that need to be ordered together, and the workarounds for when something’s on backorder. Everything is in their head.
Then they go on vacation. Or they leave. And the whole system stops.
If your inventory process only works because of one specific person, it’s not a system. It’s a dependency. And that’s a risk to your practice.
The fix isn’t complicated, but it does require intentional effort:
Document your SOPs: Write out the steps for receiving deliveries, processing returns, conducting counts, and placing orders. These don’t need to be fancy. They need to be clear enough that any trained team member can follow them.
Assign a backup: Your primary inventory person should have someone cross-trained who can step in without everything falling apart.
Store it where people can find it: A binder, a shared drive, your mobile community app, whatever works. The point is that the information lives somewhere other than one person’s memory.
This is at the core of what we talk about at VetCircle: moving from a people-dependent practice to a system-dependent one. Our operations team helps practices build these exact frameworks during our 3-4 month implementation program.
Next Steps: Take Control of Your Inventory
You don’t need to overhaul everything this week. But you can start with three things:
1. Run a report on your top 20 products by cost. If you don’t know what your A items are, that’s step one.
2. Check when your last physical count was done. If it was more than 6 months ago, schedule one.
3. Review your current supplier agreements. Are you maximizing your rebate eligibility? If you’re not sure, that’s worth looking into.
If you want a clearer picture of where your practice stands, VetCircle’s Community Membership gives you access to our Rewards Program (85+ vendor partners), Equipment Sourcing team, and a complimentary in-hospital Practice Health Assessment valued at $1,800. For new practices under one year old, membership is $1,750/year.
Want to explore if VetCircle is the right fit? Book a free consultation with our team.
Frequently Asked Questions
How often should a veterinary clinic do a full inventory count?
At minimum, once a year. But high-volume and controlled items should be counted monthly, and we recommend quarterly cycle counts for your mid-range categories. The more frequently you count, the less painful each count is, and the more accurate your COGS reporting becomes.
What is ABC analysis in veterinary inventory management?
It’s a way of categorizing your inventory by value so you know where to focus your time. A items are your highest-cost products (usually about 20% of your inventory but 70-80% of your spend). B items are mid-range. C items are low-cost, high-volume supplies. The idea is to manage each group differently based on its impact on your bottom line.
How can a buying group help reduce inventory costs for my vet clinic?
A buying group like VetCircle pools the purchasing volume of its members (312+ practices across Canada) to negotiate better rebates and discounts with suppliers. Most practices that join earn 2-3X more in rebates than they were getting on their own. You don’t need to switch everything you buy, but the savings on the products you already use can be significant.
What is a good COGS percentage for a Canadian veterinary practice?
For a general practice, a healthy target is 20-25% of revenue. If you’re consistently above 27%, there’s likely room to improve through pricing adjustments, vendor consolidation, or reducing waste. Keep in mind that specialty, emergency, and mixed-animal practices will have different benchmarks.
How do I know if my veterinary inventory system is working?
Ask yourself: does your PIMS data match what’s physically on the shelf? Can someone other than your main inventory person place an order without issues? Do you know your COGS percentage and inventory turnover rate? If the answer to any of those is no, there’s room to improve, and that’s completely normal. Most practices we assess are in the same position.