How You Manage Your Inventory Can Make (or Break) Your Pharmacy
Posted on Oct 30, 2023
It’s no secret that a large portion of your pharmacy expenses are tied to your inventory. That’s why managing your inventory is so important. When it’s done well, it can improve your cash flow and profitability. Alternatively, frequent stock issues can cost you not only the price of an expired item, but in lost sales and patient loyalty as well. Ultimately, how you manage your inventory can make – or break – your pharmacy. To maximize your shelf space and your bottom line, here are 5 tips to effectively manage your inventory.
1. Monitor product movement.
Keeping track of product movement allows you to set an appropriate on-hand quantity for each item. It’s important to find a balance between stockpiling and understocking your shelves.
- Stockpiling (or an overflow of product) is literally like letting money sit and, in some cases, collect dust on your shelves. Not only does this prevent you from investing in other areas of your pharmacy but if the inventory doesn’t move as expected, you could run into cash flow issues and complete losses if products expire.
- Understocking can also cost you. If your pharmacy is continuously out of stock when a patient tries to fill their prescription, they may take their business elsewhere. You’ll lose that specific sale and potentially the customer as well.
Tracking your sales can help you identify which medications move quickly and which don’t. It also helps you determine the amount of base and safety stock you’ll need for each product. Inventory management isn’t an annual, one-and-done event either. You should be checking your inventory at consistent intervals throughout the year. That way, you can identify and adapt to any changes or trends that may cause sales fluctuations during a particular season.
2. Watch for slow moving items and expiration dates.
Slow or non-moving items also tie up your pharmacy’s cash flow. That’s why it’s important to take a critical look at these items to determine whether you should lower your stock levels or eliminate them entirely.
Keeping track of expiration dates is also critical. We recommend periodically auditing your inventory for items that will be expiring soon. By catching them before they expire, you may be able to return the items so you don’t lose your investment.
3. Prioritize patient engagement.
Keeping in contact with your patients is another effective way to keep them coming into your store. For example, you can reach out to patients who use slower-moving or expensive medications, to determine when they plan to pick up their next script. Then, you can order the items as needed, versus keeping them on your shelves. Plus, sending electronic refill reminders to all your patients helps them stay on track and increases the chances of repeat business for your pharmacy as well.
You can also send out information on sales promotions you are running for OTC items. This helps to further incentivize patients to visit your store and ensures all your pharmacy inventory moves.
4. Evaluate your ordering patterns.
Outside of what you order, how you order matters too. Here’s why:
When you place multiple, smaller orders throughout the day, it requires more of your time. You have to submit each order, reconcile them and put items away as they are received. On the other hand, placing larger, less frequent orders helps to consolidate the time and energy you are spending on these activities. That way, you have more time to focus on more important tasks.
Plus, reducing the number of orders can also save money by reducing shipping charges and better utilize your staff as well.
5. Automate your inventory process.
Managing your inventory can be time consuming, especially if you’re trying to do it manually. Instead, you can automate many of your inventory-related tasks using, improving your efficiency, and reducing costs. In fact, BestRx has several, customizable inventory reports that make it easy to:
- Monitor sales and inventory turnover rates.
- Identify slow or non-moving items.
- Flag products that are about to expire.
- View your inventory on hand (by item or across your store).
- Track order and pricing information.
- Manage A/R activity.
Plus, you can take it a step further and use our Wholesaler Interface to easily perform inventory and pricing updates using electronic files sent from your suppliers.
Your inventory accounts for a large portion of your pharmacy’s expenses. That’s why managing it effectively is a critical component in the long-term success of your pharmacy. To learn more about how BestRx can help you manage your inventory more efficiently, request a demo today!