Want more cash? Clean up your inventory.


Manage inventory efficiently to manage funds

In brief:

  • Part of any good spring cleaning includes cleaning up your pharmacy’s inventory and improving your inventory management process.
  • Better managing inventory frees cash.
  • Best practices for managing inventory include taking advantage of medication synchronization, automation, effective purchasing processes and monitoring.

4 steps to cleaner inventory

Just as spring cleaning is a time for patients to review their drugs to help clean out expired medications, it is also a time for pharmacies to clean up their inventory. No matter how well organized and spotless your pharmacy’s shelves are, they may be cluttered with unneeded inventory, which ties up cash.

Clear out excess inventory by making the most of these practices:

  • Sync. Providing medication synchronization for your patients not only improves their adherence but makes your inventory demands more predictable. With med sync, Cooke’s Pharmacy in Ocoee, Tennessee, was able to reduce its inventory by more than $16,000 a month.
  • reduced-inventory

    That allowed Cooke’s to spend money on other things, such as a part-time technician, explained Andy Bryson, pharmacist in charge. Another pharmacy increased the number of prescriptions it filled, while at the same time decreasing inventory by 22%.

    Because a pharmacy with med sync can forecast when it will need medications, “We can order the drug and immediately get paid for it,” Bryson explained. In the past if the pharmacy filled a prescription for a $1,500 insulin drug on which its net profit was $8 and then immediately reordered, “We were negative $1,492 again.”

  • Automate and adjust. Using the “perpetual inventory” feature of your pharmacy management system allows you to always keep a certain level of stock on hand. But don’t just set your inventory and forget it. Watch for new sales trends and changes in demand to adjust your inventory level accordingly. For other ideas related to pharmacy management systems, see “How to Increase Efficiency with Your Pharmacy Management System.”
  • Cooke’s pharmacists check in early each month with patients in its sync program who have frequent medication changes so it knows what it will need to fill those patients’ orders. The pharmacy also forecasts demand for the top 20 or so most expensive drugs for people who are not in its sync program.

  • Manage. Next-day delivery from your wholesaler makes it easy to order only when you need an item. In certain circumstances, stores with multiple locations also can share inventory among them.
  • If a prescription has a high co-pay, notify the customer before you prepare the medication so you don’t end up with something you can’t use and can’t return if a customer never picks it up. One way that Cooke’s Pharmacy manages inventory is by helping customers pay close attention to their drug coverage. For example, Cooke’s monitors when Medicare customers experience a coverage gap (commonly referred to as the “donut hole”). When this occurs, Cooke’s notifies customers of the change in their co-pay. This helps prevent filling prescriptions that don’t get picked up.

  • Monitor. Have your staff do more than an annual count. Train them to regularly monitor the shelves to improve efficiency, such as returning unused stock to a distributor for a refund before it expires. Cooke’s was able to return $6,000 worth of refrigerated medications that either were close to expiring or it no longer needed because patients’ medications had changed.

Top-performing pharmacies use these approaches to carefully manage their inventory, resulting in more inventory turns and better cash flow.


While the average independent pharmacy turns over its inventory 10.9 times a year, top-performing pharmacies average 11.6 turns annually.1 That difference can mean tens or hundreds of thousands of dollars in your bank account versus thousands of dollars of inventory sitting on your shelves.

1 2014 NCPA Digest