Secrets of Proactive Pharmacy Inventory Management

The secrets of proactive Pharmacy Inventory Management are based on the often overlooked science of true supply vs. demand inventory management. Particularly in a retail environment, or wholesale distribution in support of retail, the devil to outstanding pharmacy inventory management is in the details.

Retail pharmaceuticals represent a huge investment of capital for the carrying company. Whether it is a sole proprietor pharmacy or the local Wal-Mart, the cost of today’s pharmaceuticals means that failure to recognize slow-turning inventory or failure to stock the appropriate amount of fast-moving product each has costs that few pharmacies can withstand.

When a pharmacy manager fails to execute proper execute pharmacy inventory management impacts costs on a number of levels*:

  • inventory purchase costs
  • space rental
  • storage/shelving space
  • increased property taxes
  • increased insurance premiums

Some of the general best practices include:

  • periodic inventory reviews (minimum quarterly)
  • incentivizing staff to return slow movers to vendors proactively
  • partner with patients to predict high-cost drug demand

The best support system for pharmacy inventory management is use of an IT system that maintains a perpetual inventory and that is liked to a point of sale system. This allows for maintenance of a real-time systemic inventory.

However, beyond point of sale it is critical to perform cycle counts and have strong processes surrounding return to vendor, or there is risk that phantom inventory will remain in the database.

Such errors can either ruin the relationship between the customer and the pharmacy or even result in harm to a patient who does not their medication in a timely manner.

Pharmacy inventory management systems are more complex because they must track lot numbers and expiration dates to be truly effective. Spoilage is costly, and can eat quickly into profit margin. Most retail pharmacies measure inventory turns in days, due to the high-volume nature of many inventory items.

In an ideal system, the POS and perpetual inventory system feed data to a reorder system that automatically generates the orders needed to maintain a proper level of service for the customer without generating a potential for out-sized inventory carrying costs. Where customer-pharmacy relationships can minimize costs are proactive manual orders for costly medications.

The final critical key to pharmacy inventory management is physical environment. Many medications require very specific storing temperatures. To violate those parameters can put a patient’s life at risk. Failing to maintain conditions in the safe zone can mean the loss of an entire pharmacy stock room.

* Managing the Pharmacy Inventory, National Community Pharmacists Association, 2008


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