This article was originally published in Total Pharmacy, a Pharmacy Times publication.
I often daydream about the perfect pharmacy – one in which workflows are smooth as silk, cash flow is abundant, and drug orders are always on time with 100% accuracy. In this pharmacy, the pharmacists counsel patients on medication adherence and better health practices, and technicians are attentive to each detail and each script and anticipate every patient’s needs. Customers leave with a smile, looking forward to returning again, and, at the end of the day, so do staff.
Can you relate? If not, how do we get there? We can start by addressing an underlying issue that affects nearly every aspect of the pharmacy: inventory mismanagement. Poorly managed inventory can quickly turn into the equivalent of having stacks of cash sitting on your shelves just beyond your reach, tying up valuable cash flow and contributing nothing to revenue. What’s more, this sizable investment in inventory is likely to be not an appreciating asset but, rather, a depreciating liability.
Use Untapped Resources
Effective management of pharmacy inventory takes teamwork and collective contribution, but the process and oversight are best managed by a point person. Inventory management often falls on the shoulders of a pharmacist, but as patient care services expand their responsibilities, pharmacists may find themselves spread extremely thin. All these factors can contribute to a high rate of burnout for the profession. One solution to the challenge of effectively managing pharmacy inventory may be an often overlooked resource in the form of human capital, cloaked beneath the title of technician.
Many technicians have untapped potential and are eager to learn new skills and take on more responsibility. Giving a technician ownership and accountability to oversee and manage the pharmacy’s inventory is an efficient way to invest in one of your greatest assets. Teaching a technician the fundamentals of inventory management and coaching on the execution, keeping a clear goal in mind, can reap a significant return on investment through increased profitability and greater cash flow. Effectively managing inventory goes far beyond proper stock rotation and returning outdates.
Building Rapport With Customers
Not surprisingly, technicians are often the first, last and sometimes only point of contact with pharmacy customers. Building relationships and trust are skills that great technicians often possess in abundance and can be the foundation for maintaining high inventory turnover rates. As trust and rapport build with customers, engaging patients to request refills on unit of use medications or medications with lower fill volumes can increase rates of just-in-time ordering and prevent slow-moving inventory from tying up cash flow and taking up shelf space.
Forging customer relationships can also help when the pharmacy may lack the stock to fill an entire prescription. Customers who trust and appreciate their pharmacy are more willing to accept partial fills. High trust gives the pharmacy the leeway to take care of customers’ needs and obtain medications from the most cost-effective source, which might not be next-day ordering from a primary wholesaler, especially for pharmacies that use their own warehouse for distribution.
Buy in Bulk When It Makes Sense
Every pharmacy has fast-moving products; for some of these, it makes sense to buy in large quantities to reduce the cost per unit. Stocking 500- or 1,000-count bottles of generic medications that treat common chronic disease states, such as hypertension, diabetes and hypercholesterolemia, is often the right financial decision. Technicians can help keep track of your pharmacy’s top 50 dispensed medications and determine not only the frequency at which to order but also the quantity.
Through continuous monitoring, technicians can make recommendations to optimize workflow and cash flow. Ordering 10 bottles of 100-count furosemide three times a week may be less cost-effective than an option to order three 1,000-count bottles once a week. Understanding the contractual dead net cost of your preferred generic medications through your wholesaler and tracking use can be time-consuming, placing technicians in the best position for managing
Move Inventory Where It’s Needed
No matter how well inventory is managed, a pharmacy inevitably will encounter dead stock. Customers discontinue therapies, change dosages or move away. Whatever the reason for those nonmoving medications on your shelf, they potentially tie up cash flow and produce zero revenue. As a first step, your technician can identify stock that has not been dispensed in 4 to 6 months.
You can empower your technician to identify another pharmacy in your chain that does dispense what doesn’t move at yours. This gives your technician more responsibility, and it can be a win-win situation for both locations. If this will require special software or interstore
connectivity that is not an option, you can charge your technician with being the expert on your supplier’s return policies, which may allow you to return unopened bottles for a full or partial refund. Even a partial refund helps free up cash flow and rid your pharmacy of nonmoving, non-revenue-producing inventory.
Maintain Accurate Inventory Counts
Whether your pharmacy automates ordering, uses a manual process or operates somewhere in between, knowing exactly how much is available is crucial to knowing when and how much to order. Aligning actual on-hand quantities with those of your inventory management software can prove challenging. Deducting quantities after processing prescriptions, adding inventory back in when claims are reversed, and accounting for National Drug Code (NDC) changes, shortages or miss picks can all be daunting and cause more opportunity for errors.
Teamwork can play a crucial role in this process. Empower your staff by having one technician take a team lead role, divvying up responsibilities for performing daily on-hand quantity verifications. The amount of NDCs to verify then becomes much more manageable compared with running one report of all the NDCs dispensed by your pharmacy and verifying on-hand inventory for the entire list. Additionally, verifying lower NDC on-hand quantity more frequently may expose potential issues in your inventory management system. Last, you’ll want your team to be accountable for commonly dispensed OTC items, such as diabetic testing supplies and dietary supplements.
Take On This Eye-Opening Effort
These tips for effective inventory management just scratch the surface, but they can offer you a fresh perspective on how to effectively use your team for this complex process. Tightly managing inventory can be a time-consuming balancing act of ensuring that your pharmacy has the right medications on the shelf at the
As pharmacists continue to provide more direct patient-centric services, the case for technicians to take on managing pharmacy inventory becomes more reasonable. Technicians have the capability and willingness to oversee this critical function and contribute directly to the success and profitability of the business.