Pharmacies need to know what drugs are currently in stock thoroughly. Underestimating inventory levels causes shortages, which can harm patients while overestimating can create an unnecessary surplus and lead to a wasted medication when it expires. Maintaining an effective inventory management system is the only way to avoid understocking and overstocking and ensure that the pharmacy carries just the right amount of each medication.
Why Pharmacy Inventory Management Matters
Every pharmacy needs to have an effective pharmacy inventory management system in place because it’s a fundamental requirement for keeping them profitable. Good inventory management practices keep everything organized, make it easier to understand market trends, and allow pharmacies to employ cost-minimizing strategies more effectively.
Recording historical inventory data and analyzing it can also allow pharmacies to accurately project the demand for medications in the future. Since pharmacies all serve different geographical areas and demographics, there’s no way to make these predictions based exclusively on general trends. A robust system for managing inventory and keeping track of data is the only way to ensure that the shelves stay fully stocked without allowing medications to sit on them for so long that they expire.
Periodic vs. Perpetual Inventory Systems
At large pharmacies, perpetual inventory systems that utilize point-of-sale scanners to update counts automatically after purchases and deliveries are common. Smaller pharmacies may still rely on periodic inventory management strategies, performing counts every day, week, or month.
Regardless of which type of system a pharmacy has in place, manual counting of medication is still an essential part of inventory management. However, those with advanced perpetual inventory systems that utilize high-quality software for maximum accuracy may only need to verify inventory counts once or twice a year.
Automated Control Systems
Each pharmacy is different, so no one system works best for everyone. Most pharmacies can benefit from investing in automated control systems to help with inventory management, particularly if they’re in high-traffic areas or have minimal storage space in the back room.
Effective inventory management systems can be configured to meet the needs of different pharmacies. They can also help pharmacists optimize stock amounts by differentiating between slow-moving and fast-moving medications, logging refusals, and considering replacements.
Inventory Turnover Rates
Inventory turnover rates (ITORs) can be defined on a departmental level or for the entire pharmacy. Either way, they offer crucial information about the pharmacy’s inventory management and general operation. The inventory turnover rate can be calculated as a ratio so that ITOR = cost of medications sold / average inventory.
ITOR should be calculated during each period, and the information compared to confirm how well the pharmacy manages inventory. Most economists agree that an ITOR of 10 indicates average levels of efficiency. Lower ITOR ratios indicate inefficient inventory management, while higher values show a high turnover of goods, which is a positive indicator of high efficiency.
The Most Straightforward Solution
The most straightforward solution to managing pharmacy inventory is to invest in specialized software. When choosing an inventory management system, look for a software designer that works specifically with pharmacies and others in the medical industry. That way, the software will be guaranteed to be HIPAA-compliant and will make accommodations for the industry-specific needs facing modern pharmacies without requiring too much customization.
