How many items do you have in your pharmacy? Hundreds? Thousands? All that inventory is tying up significant capital, but trimming down too much can cause shortages that keep your patients from getting the treatments they need. How can you get a handle on your pharmacy inventory in a way that reduces issues with shortages, expiration and shrinkage, without eating up all of your time?

Managing Physical Inventory

Most vet pharmacies settle on one of two organization systems:

• Organize medications by type, then alphabetize medications within those types.
• Alphabetize the entire stock.

Which one is right for you? If you have to divide storage into several areas, arranging medications by type usually makes the most sense. This way, when you go to a storage area, you can grab several related drugs at the same time.

Now is a good time to check for expired medicines and order replacements. Remember that you may be able to return some drugs for partial credit. Doing a thorough sweep now reduces future surprise turnover.

Talk to your supplier about setting up reorder tags. Most companies have color-coded labels, or you can add your own. This lets you see at a glance if a drug is due for replacement.

Once you have your system down, you can do inventories once a year for most drugs, and twice a year for high volume sellers. Dividing this up through the year keeps your office from being overwhelmed. Timing inventory checks helps manage spikes in drug demand throughout the year. For example, you probably want to inventory allergy and heartworm medication in the late winter, so you can place orders to be ready for spring.


Managing Data

Configuring the Quantity on Hand (QOH) in your practice management software (PMS) helps you keep track of inventory while you process orders. Your software should be able to calculate the average fill rate for medications, so you can plan future orders. Figure out the average doses sold per order cycle, and set a threshold in PMS to warn you when you’re close to this number.

Now is also a good time to take stock of your organization across sales channels. Simply adding online ordering isn’t enough to connect these orders to your PMS. Alternatively, while you may have set up an efficient inventory management system when you added online orders, your in-person and phone order systems may be out-of-date.

With some items, you need to use your judgment to decide how much to stock. It’s generally a good idea to keep a 30 day supply on hand, but some items may be necessary to have in stock despite being used infrequently. Don’t forget supplies. You need plenty of pill bottles, labels, syringes, cups and other goods on hand to package with your prescriptions. You don’t need to log every item, but it helps to do a quick weekly count on items that you hand out as needed.


Employing Maintenance Practices to Stay On Track and Maximize Profits

With the right inventory plan, you can have one staff member dedicate a few hours each week to the task. Keeping physical and digital records in check avoids inventory problems, and it’s also the fastest way to track shrinkage.

It may sound counter-intuitive, but one of the most effective strategies for stopping shrinkage is to budget free items for employees. Some pharmacies choose to make common targets of theft, like flea and tick treatments, one of the perks of the job, avoiding the issue entirely.

Wasted space is wasted money. Checking QOH against sales turnover as you do physical counts helps identify misalignment with demand, so you can fine tune orders to stock only what you need. It also keeps you from running out of medicines, which can persuade clients to shop somewhere else.


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