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They Don’t Teach This in Pharmacy School – Chapter 2: How Inventory Management Can Help Your Pharmacy Thrive

Datarithm Team October 19 2021
As discussed in the previous chapters, inventory is one of the largest ongoing investments of any pharmacy. For your pharmacy to thrive, implementing an inventory management system is the best solution to optimize stock control, replenishment, and drug dispensing.

The best method to manage your pharmacy’s inventory is known as perpetual inventory. Under this method stock quantities are constantly updated in conjunction with replenishment and dispensing. As such, pharmacy staff will always know what stock levels are to allow for better inventory management decisions. To take the perpetual inventory approach all that is needed is accurate on-hand positions and replenishment points for all inventory items. On-hand accuracy can be accomplished through a full physical count completed by pharmacy staff or an outside party. Establishment of replenishment points can be handled by pharmacy staff or through automation via inventory management software. With on-hands accurate and replenishment points established, restocking will occur when on-hand position reach or fall below the re-order points.

Perpetual is clearly the best solution and provides the following benefits:
  • On-Hand inventory is always accurate
  • Financial conditions (inventory investment and profitability) are readily available
  • Theft/fraud/diversion—shrink is easy to spot when PMS and shelf disagree
  • Free up working capital / improve cash flow
  • Choice of manual or automatic EDI ordering
Maintaining on-hand accuracy can be accomplished through cycle counting functionality where pharmacy staff will count a manageable number of inventory items on a scheduled basis, making corrections directly into the Pharmacy Management System (PMS). With on-hand precision, your pharmacy will experience increased efficiency, improved staff productivity and better overall customer service for your patients.

With on-hand accuracy established and maintained and re-order points in place within the PMS daily ordering can accomplished in two ways. Using the purchase order available through the PMS staff can place their orders on a manual basis or, for great efficiency and time savings pharmacy staff can use automatic Electronic Data Interchange Ordering (EDI).

While the benefits of the Perpetual Method are clear and substantial, without automation, it does come with inherent problems. Maintaining reorder points for thousands of drugs, while recognizing fluctuating demand, is nearly impossible without the proper pharmacy inventory management technology.

Benefits of Automation

  • Monthly re-order point optimization—always in lockstep with changing demand and the preferences of management/owners
  • Automatic return and transfer recommendations
  • Improved fill-rates and inventory turns
  • Intelligent cycle counting
  • Data analysis allows a close study of purchasing trends
  • Reduced ordering time—more time for your patients


An inventory management system is a must for every pharmacy.

While the multitude of benefits provided by the Perpetual Method far outweighs the initial investment in dollars and time required to implement this system, automation takes Perpetual to the highest level.

Datarithm®’s intuitive, cloud-based software is the perfect solution to implement perpetual inventory management for pharmacies of all sizes. It allows pharmacies to take complete control of their inventory with a simple-to-use dashboard and helps to free up pharmacy staff from time-consuming tasks. Datarithm®’s automated system meshes seamlessly with most leading pharmacy management systems. Datarithm® uses algorithms that forecast demand, recognizes trends, automatically resets reorder points, and surfaces potential wholesaler returns and store-to-store transfer (chains). Pharmacies deploying Datarithm® typically experience stronger profit, cash flow, inventory turns, and customer service.

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