Inventory management: reduce losses and optimize the process

The lack of items on the shelves is today one of the main reasons to lose sales and customers in pharmacies. That’s because it is no secret that, when shoppers don’t find what they want at a given point of sale, they will search for what meets their needs on the competitor.

According to the Instituto de Estudos em Varejo – IEV (Institute for Studies in Retail), the acceptable index for the lack of products in this sector is around 3% of total goods of the store. However, currently, the Brazilian pharmaceutical retail has an average percentage of 10%.

The data is worrisome, and often due to lack of knowledge, some managers may question whether the best way is to purchase more stock to avoid sales break.

This solution is not always the best choice, as both lack and excess can lead to financial losses when there is no buying planning nor the use of good management pharmacy software. And it’s simple to understand why: as we have seen, the lack of products takes the customer to the competitor, however overstock can mean idle working capital within the point of sale, which also causes losses.

Equalizing the question

To better understand what we mean, let’s imagine a drugstore failing in the inventory management process, and because of that, it registers monthly loss of 10 units due to the expired period of validity. Of this total, the average cost of each item is R$ 12.00*. Thus, the monthly loss is R$ 120.00, and the annual is R$ 1,440.00.

The best way to solve this kind of problem is through the use of good pharmacy software, which allows you to make assertive management.

By using this type of management system, you can take complete control of batches and expiration of moved items and inform the seller of the items that are close to deteriorate in the current month – thereby facilitating the integration of the store processes. Another advantage is the possibility of adjusting the purchase model and planning the purchase of demand for inputs.

Stock readjustment

Another advantage in using a pharmacy system is that you have the possibility to use the stock realignment function to perform a search on the movement of all the items available on the network.

Thus, through the demand analysis of each product, the system suggests the readjustment of goods among the sales outlets. For example, the manager can rearrange excessive items in an establishment and transfer them to others who need to replace them.

No doubt, it is an excellent way to optimize the reservations management, especially if you have more than one sale outlet to manage.

Let’s take as an example a six stores network, with R$ 80,000.00 provision, at manufacturing expenses for each. When performing the stock readjustment function, the software suggests a minimum adjustment corresponding to 5% of the value of the stored items. This means that the pharmacy will have to transfer R$ 4,000.00 to each one, about R$ 24,000.00, considering all six. It can also be said that the pharmacy will organize the sale of R$ 24,000.00 in products which are likely to be purchased from the distributors instead of being transferred.

In practice, this money would be idle. However, if applied, it could easily pay 1%, or R$ 240.00/month or R$ 2,880.00/year. Therefore, the impact on working capital is twice the value, because in addition to having R$ 24,000 idle, it is likely that money will lack for other products.

Collating data

On the day-to-day of the pharmacy management, it is also common to come across a stock volume difference presented when confronting manual control and information identified by the system.

Imagine a sales outlet with R$ 100,000 of stocks and selling the same amount per month. If your profitability is 10%, or R$ 10 thousand, and your stock has a monthly difference of 5% (95% hit in stock), 50% of profitability in inventory difference will be compromised monthly.

Knowing what percentage of the pharmacy profit is committed by the stock difference is a valuable thing to avoid losses and increase profitability. Therefore, it is worth questioning some points: How much would your pharmacy be earning if its stock were “closing” with over 97% accuracy? What is the final profit margin? What is the value of the current stock?

Undoubtedly, inventory management is critical to the financial health of the pharmaceutical channel. Therefore, consider investing in a pharmacy management system that ensures at least 1% more stock assertiveness in each store. Surely your gain will be much higher than the investment.

Do you identify with this situation and want to change this scenario in your business? Talk to us. Our solution is fully prepared to help you make a precise inventory management and turn possible losses into profit.

(*) National Average ticket: R$ 20.00 x CMV 60% = R$ 12.00.