In any brick and mortar business, paying attention to day to day costs often means the difference between success and failure. Hold too much stock and you risk losing money on unsold merchandise and you miss out on other opportunities to put your money to work; hold too little stock and you risk alienating customers when you don’t have ‘their’ product on the shelf and end up paying top dollar for products when you have to buy them last minute.
This dilemma is particularly acute in the pharmacy sector where it is tempting to employ just in time ordering on high cost medications with limited shelf life. While this method of inventory management effectively reduces wasted product and frees up capital for other expenses, placing many small orders throughout the week can quickly eat up time and money better spent elsewhere. Furthermore, for pharmacists making frequent orders, it can be tempting to add non-perishable, high turnover items on to the daily order sheet, even when it is obviously more cost-effective to buy in bulk from a lower cost supplier.
To make top-dollar and remain competitive, an effective inventory management strategy is a must. When it comes to items with a high holding cost, such as medications with a low turnover or short shelf life, keeping as little product on the shelf as possible is the name of the game. However, when it comes to staples and non-perishables, such as bags and containers, buying in bulk can have significant cost savings over the long-run, especially when delivery costs are taken into account. Stocking up at the lowest rate can also save time and headache associated with having to constantly check inventory and place orders.
For pharmacies looking to save money, understanding the trade-offs between just in time ordering and buying in bulk and employing different ordering schedules for different products can be the secret to getting costs under control.