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How to Manage a Pharmacy: Inventory Management Guide

Posted: February 03, 2020 by Ly Phan

How to Manage a Pharmacy: Inventory Management Guide

When it comes to healthcare, organizing inventory takes on particular importance. Not only do patients need the right medicine and dosage, but they also depend on having a steady supply and stock that’s within date. Pharmacies, manufacturers, and distribution centers each play a pivotal role in this process of delivering medicine to the end customers - the patients. The unique challenge of how to manage a pharmacy is juggling medical expertise with the technical skills behind inventory management.

The other challenge faced by pharmacies is the issue of compliance and regulations. Even within the United States, laws on medicines vary from state to state, which adds a layer of complexity. A well-known example is the laws on Cannabis-based medicine, ranging from the open regulations in Colorado to zero-tolerance in Arizona, with many states in between.

In today’s world of global supply chains, ensuring optimum stock levels while meeting strict and varying laws, running a pharmacy is both a logistical and medical challenge. In this post, we will guide you through the steps pharmacists can take to master their inventory management.

 

Identify Customer Demands

For the pharmaceutical industry, the needs of the end-user take on an extra level of importance. There needs to be a clear line of communication pharmacies and their suppliers to ensure they have the right level and types of medicine at all times.

The pharmaceutical supply chain is complex and prone to problems. With tight regulations and limited manufacturers for certain types of drugs, there is a small margin for error. For instance, an important type of penicillin has been unavailable in 39 countries since 2015, including Australia and the United States. This illustrates the need to monitor stock levels and customer demands continually. While suppliers may not be able to control global events, it’s critical to be prepared and serve the end-users as much as possible.

With the needs of the customer in mind, warehouses will be able to prioritize which products to have in stock and match the demand. 

 

Professional Handling of Medicines

One of the key pharmaceutical regulations is the handling of medicines throughout the supply chain. While there are some variations between countries and states, the general rule is to minimize the handling of drugs among non-medical workers. For example, a distributor may transport and move packages between locations, but those packages can only be opened by qualified professionals - such as pharmacists or inspectors.

These laws are in place to guarantee the safety of the medical supply chain, and any breach, unintentional or not, will be viewed with the utmost seriousness. The penalties and reputational damage to a business that contravenes regulations would be severe. Therefore, staying on top of the latest rules is a crucial aspect of a successful pharmaceutical business.

Having an efficient inventory management system in place can help pharmacies streamline various processes, including:

  1. Receiving and putaway
  2. Pick and pack
  3. Order fulfillment
  4. Product returns

Utilizing the full features of SmartTurn’s pharmaceutical inventory management software enables businesses to reduce the risk of mistakes or damage to the products while adhering to regulations.

 

Avoid Overstock

The temptation to have too much stock rather than too little is understandable, particularly given the high stakes involved. However, the cost of medicine and healthcare equipment are expensive and on the rise. A single Sovaldi pill, a drug that treats Hepatitis-C, costs around $1,000, which is not something businesses can afford to waste, particularly when they will come in batches of multiple pills. The latest statistics suggest up to $265bn a year is wasted in the US healthcare system alone, which not only affect businesses but also patients.

To avoid overstock, pharmaceutical businesses need to manage relationships at both ends of the supply chain. By having a solid understanding of demand, your business will be able to communicate your requirements with the manufacturers and manage the volume of stock received. In essence, the aim is to minimize waste throughout the chain and reduce the cost for all partners.

Inevitably, there will be a certain safety stock level, but by managing the levels efficiently, avoiding the wastage of more expensive drugs, companies can minimize the associated costs.

 

Manage Repeat Prescriptions

inventory management is crucial for healthcare industry

A common thread in pharmacies around the world is repeat prescriptions, where patients collect the same medicines on a regular basis. For pharmacies, having a streamlined process in place for those prescriptions can save time and money, as well as delivering accuracy. 

The other challenge is when those prescriptions are not collected by the patients and returned. By taking a proactive approach with those returns, your business will be able to resell the drugs or pass them back to the manufacturer. This relies on strong relationships between trading partners, based on clear lines of communication and contracts.

 

Real-Time Visibility

To achieve a smooth medical distribution system, real-time visibility is vital, as Florida-based medical supplies distributor, West International, found out when they began to use SmartTurn’s pharmacy inventory management software:

“SmartTurn is our competitive advantage and has helped us overcome the burden of those regulations,” said Mike Galuzzo, VP of West International. “We are constantly amazed by the value for money with its SaaS WMS. Our advantage boils down to this—we can deliver the same day to our customers, while our nearest competitors are 5,000 miles away.”

The advantage Galuzzo refers to is primarily based on the real-time visibility SmartTurn’s solution offers. It enables the company to quickly and efficiently handle complex orders, with split batches and expiry dates. Using the software, West International increased fulfillment accuracy from 90% to 99% from its previous system. 

As well as providing a critical competitive advantage, SmartTurn’s integration capabilities can allow companies to seamlessly work with trading partners and ensure regulatory compliance throughout the supply chain. By automating those processes with inventory management software, businesses can become more efficient, reduce costs, and find opportunities to grow their revenue.

 

Technology Ensures Accuracy

The question of how to manage pharmacy inventory systems can be a complex one, but the answer lies in accuracy. The healthcare industry around the world relies on delivering the right medicine, to the right people, at the right time. Speed is worthless if stock levels and supplies are not maintained. 

To ensure inventory accuracy, it’s essential to utilize the power of cloud-based software to automate the processes involved in moving and handling medicines. As the case study above demonstrated, smart use of technology can increase accuracy to unprecedented levels - and not attainable with traditional, paper-based systems.

The ideal mix of shipping accuracy and speed can only be achieved by using flexible, cloud-based software from reputable providers such as SmartTurn.

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