Smart Inventory Management: Reducing Expiry Losses by 40%

Effective inventory management is the backbone of a profitable pharmacy. This guide reveals proven strategies to reduce expiry losses by 40% while maintaining optimal stock levels for customer satisfaction.

Implementing FEFO System

First Expiry, First Out (FEFO) is crucial for pharmaceutical inventory. Unlike FIFO, FEFO prioritizes medicines based on expiry dates, ensuring older stock moves first regardless of purchase date.

"FEFO isn't just a best practice—it's a necessity in pharmaceutical retail. It's the difference between profit and loss on your slow-moving inventory."

• Organize shelves by expiry date, not arrival date
• Train staff to pick items with nearest expiry first
• Use color-coded labels for quick expiry identification
• Implement monthly expiry audits

Setting Optimal Reorder Points

Calculating the right reorder points prevents both stockouts and excess inventory. Here's a data-driven approach to inventory optimization:

• Fast-moving items: Maintain 15-20 days of stock
• Regular items: Keep 30-45 days of inventory
• Slow-moving items: Limit to 60-90 days supply
• Seasonal medicines: Adjust based on historical patterns

Automated Alert Systems

Technology-driven alerts can dramatically reduce losses and improve efficiency. Set up these critical notifications:

• 90-day expiry warnings for proactive action
• Low stock alerts based on consumption patterns
• Overstock notifications to prevent tied-up capital
• Supplier order reminders for critical items

Managing Near-Expiry Stock

Strategic approaches to move near-expiry inventory before it becomes a loss:

• Offer bundled deals with fast-moving products
• Create a "clearance" section with discounts
• Partner with clinics for bulk purchases
• Negotiate return arrangements with suppliers
• Donate to charitable medical camps (tax benefits)

ABC Analysis for Inventory Optimization

Categorize your inventory for better control and resource allocation:

• A Items (20% of SKUs, 80% of value): Daily monitoring, tight control
• B Items (30% of SKUs, 15% of value): Weekly reviews, moderate control
• C Items (50% of SKUs, 5% of value): Monthly checks, basic control