Inventory shrinkage is a persistent challenge faced by pharmacies and hospitals where actual inventory levels fall short of what’s recorded. This discrepancy often stems from theft, spoilage, recording errors, and damage. For example, if you operate a pharmacy, spoilage could occur due to improper storage conditions for sensitive medications, like vaccines.
Waste, another challenge, refers to the inefficient use of stock during production, like excess inventory, expired medications, and defective products.
If left unchecked, both can wreak havoc on the profitability of your business, contributing to revenue losses and fines, and even jeopardizing human safety.
The good news is that an inventory management system (IMS) can help address these challenges and mitigate the risks.
What is an IMS?
An IMS is a digital tool that helps you better manage your inventory, from tracking stock to processing orders to forecasting demand. Unlike manual systems, an IMS lets you track inventory in real time and automate tasks to remove human input and minimize errors.
You can set specific reorder points to maintain optimal stock levels, create customer reports for FDA compliance, and use robust tracking and workflow management features to mitigate shrinkage and waste.
So, how does an IMS address shrinkage and waste?
It uses several mechanisms throughout your quality assurance (QA) and quality control (QC) processes to better manage and mitigate waste and shrinkage, including:
1. Advanced inventory tracking for better medication management
Part tracking lets you track and trace inventory, like medications, medical devices, equipment, and supplies with serial and lot numbers. You can quickly identify and manage medications close to, or past, expiration dates.
Dynamic attribute tracking, in turn, allows you to specify and track other inventory labeling details, like storage conditions (e.g., temperature) to prevent spoilage, and usage history to identify patterns of overuse and underuse.
2. Automated alerts for timely medication disposal or usage
Create custom alerts to notify key medical personnel of items approaching expiration. This enables timely disposal and usage before expiration, while ensuring compliance with regulatory requirements.
3. Automatic reordering to maintain optimal medical supply levels
Set specific reorder points to ensure medical supplies are automatically ordered when they drop to a particular level. This helps prevent unnecessary stockpiling, while ensuring you can comfortably meet demand.
4. Custom reporting to pinpoint inefficiencies and optimize waste management
Use various custom reports to optimize waste and shrinkage management. For instance, the Part Activity Report lets you track all inventory and pinpoint any inefficiencies causing waste, like excessive usage of certain medical supplies in specific areas. From there, adjust production levels to minimize waste caused by overstocking or stockouts.
5. Barcode scanning to reduce errors
Barcode scanning facilitates accurate and speedy inventory management, minimizing stock counts and movement errors that can lead to loss or shrinkage.
For example, if you’re a pharmaceutical manufacturer, you can use barcode scanning to track the movement of medications within your production facilities. Simply assign a unique barcode to each medication package and ensure the item is scanned at various manufacturing processes, like packaging and quality control. The data is captured in your IMS, allowing you to verify product information, track batch numbers, ensure compliance, and minimize errors that lead to inventory loss.
6. Forecasting tools to predict inventory needs
Use forecasting tools to predict inventory needs based on historical consumption, helping you avoid stockpiling, which can increase the chances of waste. For example, if you run a pharmacy, you can use forecasting models to anticipate the seasonal fluctuations in demand for flu vaccinations and adjust how much you carry.
7. Custom workflows for better waste disposal
An IMS helps with waste disposal by allowing you to create custom workflows. Start by determining which disposal methods comply with environmental regulations. Next, create specific tasks, like recall tasks and assign them to custom workflows within the software for waste retrieval. Next, document, assign, and record these disposal workflows and reconcile them to your books.
The bottom line on managing waste and shrinkage with an IMS
With features, like advanced inventory tracking, automated alerts, customer reporting, barcode scanning, and forecasting tools, an IMS is essential for managing waste and shrinkage in the pharma and healthcare industries.
The key, of course, is to choose the right solution from the start. Fishbowl is a popular IMS for pharmaceutical and healthcare businesses needing robust inventory management in order to meet strict regulatory compliance.
In addition to providing tools to effectively manage waste, Fishbowl offers features that allow you to closely monitor and manage your QA and QC processes, optimize inventory levels, minimize measurement inaccuracies, optimize storage management, and improve order accuracy.
Book a demo to see how the top-rated IMS for QuickBooks over the last two decades can help your business.