Good inventory management helps you control how much product is sitting on the shelf, how much is expired or obsolete, ordering habits, shrinkage and waste. But moving the needle on cost of goods sold requires looking beyond inventory management, writes Tiffany Consalvo BS, CVPM, CCFP.
Consalvo shares an infographic outlining five areas that can make a meaningful difference in your hospital’s COGS in her LinkedIn post <Link>.
Source: LinkedIn, Tiffany Consalvo BS|CVPM|CCFP, October 15, 2026. Link.
<BQ> “Inventory management is about controlling the product. COGS management is about controlling the economics of the product.”
Commentary
COGS averaging is one challenge veterinary clinics face with inventory replenishment orders. For example, buy 10, get two free. If a clinic marks up using last COGS to calculate pricing, the new selling price may be lower, giving away the value of the deal.
Example: Cost of units/value of all items=% (charged unit price) = actual COGS for all units
Buy 10 @ $15/ea get 12 kind-4-kind units [($10*15)/$180] = 0.83 * $15 = $12.50 each
Considerations:
- If using cost averaging and on-hand inventory is 15 units bought at $15, the new order brings on-hand inventory to 27 units with an average cost of $13.89 each
- If receiving all 12 units into inventory at $15 each, the COGS stays at $15, but there is a $30 gap in what was paid versus COG (challenges 3-way match; PO-invoice-receiving)
Depending on how the PIMS and accounting handle things, receiving only 10 units at $15 followed by an inventory adjustment that adds two units at $15 may work with the $30 value of the adjustment noted for total COGS accounting.
Image: Link.
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