5 Inventory Management Best Practices for Pharmacies
Posted on Dec 20, 2023
When pharmacies develop an inventory management strategy, the goal is typically to minimize the total inventory costs while still meeting patient demand. Having too much inventory on hand will tie up your cash flow, while stocking too little can cost you sales. That’s why it’s essential to have a process for how you’ll proactively monitor and adjust your inventory when needed. To help get you started, here are 5 inventory management best practices that can help you achieve and maintain optimal inventory levels:
Establishing Reorder Points
You can use your BestRx software to generate a variety of sales and inventory reports. These reports can help you quickly identify which products are most popular, and which may need to be kept in limited supply. They can also help you determine how much inventory you’re selling on average, for a set amount of time. This is helpful in determining both the minimum amount you’ll need on hand to keep up with patient demand, as well as the maximum quantity you should keep on your shelf.
Setting reorder points shouldn’t be a one-and-done activity. Be sure to review your sales and inventory reports monthly ( at least or quarterly) so you can quickly identify changes in demand as well. For example, demand for brand-name medications may decrease as generics become available. Or, certain items like cold and flu medications may be a top seller in the winter but have limited sales in other seasons. By comparing your inventory levels against your current sales, you can adjust your ordering habits to stay stocked on what’s selling now, without getting stuck with excess inventory of everything else.
Watching Expiration Dates
The best way to ensure you don’t end up with wasted product is to carry a one-week supply of most items. Otherwise, you run the risk of products expiring on the shelf if your estimated patient demand falls short. That’s why it’s important to be aware of your wholesaler’s return policy, and keep track of items that are set to expire as well. This way, you can return products before they expire and avoid literally throwing your money away. We recommend adding expiration date monitoring to your team’s weekly workflow, so it’s not forgotten.
Limiting your Quantity on Hand for Expensive Items
For more expensive drugs, it’s best to keep inventory to a minimum. You can eliminate or drastically reduce your quantity on hand by streamlining your refill process and using next-day delivery, if it’s available. For example, BestRx offers a MedSync feature and electronic patient notifications, which can help you coordinate refills with patients. MedSync helps you better predict when a medication refill is needed, so you can order as needed. Then, you can send the patient a text or email alert, reminding them to pick up their medications as well. This reduces the chances it will be abandoned in your will call bin.
Performing Periodic Physical Inventory Counts
In addition to tracking your inventory in your pharmacy software, you should perform annual or semi-annual physical inventory counts as well. These physical counts not only ensure your records match what’s actually on your shelves, but they provide the perfect opportunity to rotate items and check expiration dates as well.
Bonus Tip: Don’t forget about your OTC inventory! Assess seasonal trends for over-the-counter items and keep your front-end stocked as well. In fact, studies have found that customers often hesitate to buy the last package of an item. So, be sure to keep a few items stocked at a given time. The last thing you want is to miss out on a sale because your inventory is sitting in a storage room – not on the shelf.
Finding your inventory sweet spot can be a challenge if you don’t stay on top of it. That’s why BestRx offers a variety of reports, integrations and advanced features that can help. Request a free demo to learn more!