Optimising levels of stock in your pharmacy

Atul Mehta from Moore Stephens Markhams Chartered Accountants discusses how to ensure you are optimising the levels of stock in your pharmacy.  Download the article in Contact Magazine October 2016 here.

The purchase of stock is one of your biggest business costs and is likely the biggest asset that you hold. Therefore it is very important to have a good stock control system in place that will help your pharmacy function efficiently. A good stock control system should include the following:

  • An efficient ordering system – place the responsibility of this in the hands of a trusted team member.
  • Stockturn management – it is important that you know what items are selling well and which items are slow moving. Purchase items in advance that you know you will be able to sell.
  • Perform regular rolling stock takes (monthly) to reconcile physical shelf stock against your electronic stock system – don’t just wait until 31 March.
  • Efficient recording and dispatch system – ensure you have excellent stock receiving procedures and checks in place so that when goods are received into the pharmacy they are checked off against the invoices and delivery dockets, the details are loaded correctly into your electronic stock system, and any damaged goods or returns are promptly dealt with. We sometimes find quite material errors in the entry of stock into the electronic systems. For example,1 pack of 10 items is entered as 10 packs instead.
  • Efficient storage – it is imperative that you have an effective storage system to ensure the stock is allocated to the correct place in a timely manner so it is ready for sale.
  • Minimise stock losses – implement formal procedures to try and minimise any stock that is wasted or pilfered through your pharmacy.

 

Stock turn

This is a calculation that shows the average number of times per year your pharmacy sells its stock:

= Cost of goods sold
Closing stock

 

Generally, a higher result means effective control over stock. Often however, if the result is really high, it can potentially
mean that your pharmacy is understocked and you are losing sales. A low result affects your pharmacy’s cash flow on the basis
that you have invested in stock that is not selling well, which can result in stock obsolescence and wastage.

In the Moore Stephens Markhams 2015 Pharmacy Benchmarking Survey the average stock turn was 9.58.

Understanding how your pharmacy stock is made up, what sells well, and what is slow moving, is the first step to
ensuring that you optimise the levels of stock in your pharmacy.

The purchase of stock is one of your biggest business costs and is likely the biggest asset that you hold.

It is important to have a good stock control system in place that will help your pharmacy function efficiently.

Understanding how your pharmacy stock is made up, and how its selling is the first step to ensuring that you optimise
stock levels in your pharmacy.  For more information or advice concerning stock levels, please get in touch with us.

Serious about your success?