START SIMPLE

When opening a new dispensary, Newsome says, it might be helpful to start with a smaller selection of products until the practice has fully analyzed its market niche. "We started with 400 frames or so and now we have 600," she notes. "Start with the basic, middle-of-the-road products, and move more to the higher and lower ends as you get going."

Experts also suggest a similar approach to stocking spectacle and contact lenses, regardless of how established the dispensary is. Because contact lenses don't go out of style, most dispensing MDs will carry a standard array of products, such as extended wear, daily-wear, disposable, bifocal and toric lenses in common prescriptions. "These products are good for X number of years, so you only need to worry about dispensing them before they expire," Dr. Bacotti says.

Dispensers only need to worry about stocking spectacle lenses if they have an in-office lab (most wholesale labs will stock a full array of lens types and materials). To start, experts say, practices with in-office labs should only stock lenses that can be easily processed, such as single-vision conventional plastic. As your lab's expertise grows, so can its line of lens products.

SETTING UP AN ORGANIZED, EFFICIENT SYSTEM

Selecting the product mix isn't the only inventory issue facing dispensing ophthalmologists however. In order to run the optical shop efficiently and profitably, it is important to set up a system for managing the inventory, purchasing products and controlling costs. That system involves two steps:

1. Keeping the product mix up to date with current trends and customer needs.

"In the summer we put out about 150 extra sunglass styles and remove some other styles from the boards," Dr.Bacotti says. "In the winter, we add goggles and sports eyewear to the mix. We are always changing it around, but we have a plan in place. When you are paying an average price of $34 a frame, and you have 1,000 frames in stock, you do the math. You don't want to have merchandise sitting around. You want to have products people will buy."

2. Keeping the store organized and customer friendly.

One thing Dr. Sullivan learned when expanding his dispensaries is that less is often more. Prior to the redesigns, his optical shops displayed an average of 1,200 frames. They have since reduced that to an average of 938 frame styles per store. "We decided to reduce the mix as we got bigger," he says. "We found that too many frame styles overwhelmed the consumer, and that we often had duplicate frame styles from different manufacturers on the boards." Dr. Sullivan's wife Marcia also worked with the practice to make sure it stocked a wide variety of quality frames without duplicate styles.

CUTTING COSTS THROUGH ECONOMIES OF SCALE

Having so many styles can also bog down the product ordering process at the dispensary level, notes Carney. By paring down the styles in stock, Eye Health was also able to reduce the number of manufacturers they worked with by roughly 50 percent, to between eight and 10. "We have found that by buying more from fewer manufacturers, we get better economies of scale and have a better relationship with the companies we deal with," says Carney.

Newsome's inventory cost-control strategy, meanwhile, has been to deal largely with buying groups, organizations that pool several dispensaries together for purchasing in order to take advantage of economies of scale. The result has been better discounts on the products they purchase for the dispensary. "We could never get the kinds of prices we get with the volume we'd order on our own," she explains.

Whether you plan to deal directly with manufacturers or through a buying group, it is very important to look into their policies on issues such as co-operative advertising, product returns and warranties, as well as their reputation within the industry.

"You really are looking for an opportunity for partnering," says Dr. Bacotti. "With inventory, there is no hard and fast rule. only what is best for vou and your patients."

(Back to Part 1)