Best Practices for Independent Pharmacy Inventory Management
An independent pharmacy is only as good as its inventory, so it makes sense to manage it effectively. Knowing how to trim the fat off your inventory management practices can keep your pharmacy leaner, more effective, and more financially stable as well as support your customersâ€™ needs first.
Know Your Customers
The first step of really managing your pharmacy inventory well is knowing your customers and what their needs really areâ€”not just what you hypothesize they might be.
As a small, independent pharmacy, you have a unique ability to connect with customers one-on-one, which is something a large chain canâ€™t really compete with. There are several ways to get a more accurate idea of the medications that are actually being sold at your pharmacy that also increase your profitability and social collateral.
- Run daily, weekly, and monthly reports from your medication-tracking CRM or billing software.
Take a look at the prescriptions and over-the-counter medications that are moving quickly, as well as the ones that are harder to sell. You need about 15 data points to start accurately identifying trends such as frequently ordered products and slow sellers, but even more to identify seasonal or yearly trends. Patience and dedication are crucial to collecting this data, but it means youâ€™ll be better prepared next year without over-ordering.
- Do quarterly reviews with staff regarding general trends.
Your pharmacists and pharmacy techs are on the ground floor when it comes to getting anecdotal evidence about what is hot and what is not. Every few months, have them share their insights as to what theyâ€™re seeing increased need for, and what has been sitting on the shelves. These can also be added to your data points to develop a good overall idea of what the dispersing trends are in your area and for your particular clientele.
- Enlist your customersâ€™ help
Customers who have special medication needsâ€”those who only order rarely-used or expensive medications a few times a yearâ€”are often happy to help you know exactly when to order what they need so that you are not investing too highly in these medications. In your CRM, set reminders to check in with them every quarter to find out when they will be needing to restock their supply so that you are prepared to serve them when they need it most.
Stock Well, Stock Flexibly
Once you know what your customers need, you need to consider flexible solutions to making sure their needs are met in a way that keeps your business at the perfect balance of â€œjust enough, but not too much.â€ This is done through flexible stockingâ€”a combination of stock rotation, early-response ordering, and value-driven purchasing.
- Know your inventory
Despite your best efforts, there may be medications languishing on your shelves that are taking up valuable shelf space where another medication could be turning a profit. Consider doing a weekly stock check with your employees looking for expired or nearly-expired medications that can be resold back to the manufacturer. Also identify slow-moving stock that could be pulled to make room.
- Balance value with expense
It is tempting to purchase stock from secondary suppliers, especially when the profit margins are nearly double those of your primary contract suppliers. While there are some deals too good to pass up, consider that sticking with your primary contracts can earn you rebates that, in the long run, make up for the value lost on the initial sticker price.
In addition, low-cost sometimes means low-quality, and that can have expensive long-term consequences for your independent pharmacy. Make sure that every supplier is Verified-Accredited Wholesale Distributors, or VAWD-certified, through the National Association of Boards of Pharmacy (NABP).
- Stock slowly
Product surplus means that huge amounts of the money youâ€™ve invested in medications is not driving profit. This is especially risky in the first few years of your independent pharmacy when you know you need medications, but you may not know exactly how much or how quickly they will move.
Instead of stockpiling, make smaller, regular orders that allow you to stock with stability over time. Also, consider that some medicationsâ€”your base stock, or medications that are your daily bread and butterâ€”can and should be ordered in large quantities, while othersâ€”your â€œsafetyâ€ stock, should be ordered as infrequently as possible.
The More You Know, the Better Your Inventory Management
As you gather data and anecdotal evidence about your particular area and customers, you will have a better idea of how to remain flexible in managing your inventory. You can also leverage technology to help gather information and assist you in sending refill reminders, customer surveys, and gathering the hard data to define whether your independent pharmacy business model is profitable or not.