Stock is the biggest cost in any retail pharmacy. Any business that holds stock for retail or as raw products for manufacture can reduce their costs by managing their stock well. There are three elements to actively managing the costs of stock:

• Stock holding
• Shrinkage
• Purchasing.

Stock holding 

A large amount of working capital is held in stock. Reducing stock holding releases this capital, allowing you to reduce borrowing and cut interest costs. However, reducing stock holding too much can lead to you not meeting customer expectations, which in turn leads to poor customer loyalty.

A useful tool for measuring stock holding is stock or inventory cover. This is simply the number of weeks' of stock that you hold and is calculated by dividing your current stock holding by your average weekly sales.

Dispensary stock is generally delivered twice a day during the week and once on Saturdays. For most lines, you might need no more than the maximum quantity you have dispensed in 24 hours. For some lines, this gives a stock cover of 36 hours; other lines that are used less frequently will have a stock cover of four to eight weeks.

Some dispensary computer systems have live stock management features and these are the best way to manage down stock levels. They work in a similar way to EPOS systems that manage retail stock by making the decision to reorder stock based on historical use data.