Inventory Management Flashcards
(41 cards)
Issues with High Inventory
Issues:
- Cash flow, Shelf space, Product expiring, Product damaged, theft
- Money is wasted
- Easier to steal (harder to notice)
Issues with Low Inventory
Issues:
- Lost sales, negative patient experience, patient harm
- Patient will not have enough stock and we will have to owe them
Methods to Track Inventory
- Manual
Pen and Paper
Spreadsheets
Methods to Track Inventory
- Barcode Scanning
Unique Product Code
- Inexpensive
- Limited information
Methods to Track Inventory
- Radio Frequency Identification
Quick scanning
Contains more information
Security concerns (Can be forged, private information)
Perpetual Inventory
- Min / Max
- Manually set per item
- Automated based on past purchasing / selling history
Computer will automatically order
Perpetual Inventory
- Scientific Forecasting
Calculated ordering that accounts:
- Inventory carrying costs
- Supplier lead time (shipping)
- Forecasted demand (seasonal)
Perpetual Inventory
- Reorder Points and Safety Stock
Incorporates lead time from order to shelf
Balance safety stock to account for demand changes or replenishment delays
Perpetual Inventory
- Advantages
Helps reduce the time for manual counting by automating the ordering and counting process
Perpetual Inventory
- Disadvantages
Computer does not give you a reason why, just automatically orders
If information is put into the system wrong then the system will lose its capabilities
Perpetual Inventory
- Manual
Should also inspect stock manually to make up for gaps with electronic system
Inventory Turn Over Ratio
- What is it
The number of times the dollar value of inventory is replaced in a year
Lower ratio = less turnover = More stock on hand
Inventory Turn Over Ratio
- What does a Turn Over Ratio of 12 mean
Means that in a year the inventory is sold and replaced 12 times
Inventory Turn Over Ratio
- COGS
Cost of getting the inventory that was sold
- Is matched to the sale of the products
Inventory Turn Over Ratio
- Average Inventory Value
(Starting Value + Ending Value) / 2
- Can fluctuate throughout the week/month depending on demand
Average Community Pharmacy Turn Over Ratio
10.7
Top 25% of Performing Pharmacy Turn Over Ratio
11.7
- Ideal is 12 (pharmacies should have 1 month of stock on hand at all times)
Front of Store Turn Over Ratio Benchmark
8-9
- Generally need more product on the shelf because patients self-select products
Inventory Verification
Comprehensive Annual Physical Count
- Count by location and match to system
Cycle Count
- Count certain sections every month/week/etc.
- Can be used instead of a comprehensive annual physical count
Comprehensive Annual Physical Count
- Use
Corrects pharmacy system values
Accounts for unfilled products and owed products
Caution for Controlled Substances Adjustments
- Higher accountability for these
Inventory Losses
- Causes
AKA: Shrink = Loss of inventory
- Damage
- Theft
- Receiving Errors
- Selling Errors
Controlled Drugs and Substances
- Health Canada Requirements
Comply with the act:
- Security
- Inventory counts / reconciliation
- Purchase records
- Dispense records
- Destruction records
- Reporting: Loss / Theft / Forgery
Controlled Drugs and Substances
- Alberta Standards for the Operation of Licensed Pharmacies
Security of drugs in the dispensary
- Have procedures to identify theft, loss, or diversion
- Maintain perpetual inventory
- Documented audit to verify perpetual inventory
- Investigate any discrepancies
