Hi friend,
Ever find yourself wondering, "Am I carrying too much stock?" or "How can I avoid costly expired medications?"
Understanding your inventory turn rate can help you gain control and improve your cash flow.
A healthy turn rate means you're effectively meeting dispensing demand without tying up too much cash in unsold products. By reducing overstock, you can lower the average dollar value of your inventory and improve your turn rates.
Calculating your turn rate: divide your total cost of goods sold (COGS) by the average dollar value of your inventory. For example, if your COGS is $3,600,000 and your average inventory value is $300,000, you’re achieving 12 turns per year.
Implementing an automated inventory management system can significantly cut down the costs associated with maintaining and replenishing stock. Here’s how:
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Carry Costs: These can range from 20% to 30% annually and include expenses like interest and insurance. Knowing how to calculate these can help you manage your cash flow more effectively.
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Replenishment Costs: Think about all the time your staff spends placing orders and verifying receipts. That’s valuable time that could be spent caring for patients instead!
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Expired Drug Returns: If you’re losing 10% of your inventory to expiration and only recouping 80% of the returnable items, that’s money sitting on your shelves.
To dive deeper into how you can boost your pharmacy’s efficiency and financial wellness, check out our latest blog: How to Build Your Business Case for Pharmacy Automation.
Ready to let the cash flow, flow?
