Inventory Management

1. Inventory Management Jessica Tagerman, Pharmd, rph Adapted from Pharmacy Technician Quick Study Guide & Mosby’s Review for the Pharmacy Technician Certification Exam

2. What is Inventory Management?Why is it important?

3. What is inventory management? • Inventory • Products or merchandise (e.g. drugs, devices) available to meet future demand • 2 Main Goals of Inventory Management: • Ensure medication is available to patients when they need it • Ensure costs associated with product procurement/time spent on inventory management are minimal.

4. Ordering Inventory • Ordering procedures are different for each pharmacy. • Factors that influence product ordering decisions: • Inventory turnover rate • Manufacturing sources • Purchase price

5. What are some strategies used to manage inventory?

6. Inventory Management Strategies • Just-in-time ordering: • Ordering a product just before it’s used. • PAR (Periodic automatic replacement) Value • Drug that is automatically reordered based on minimum and maximum inventory levels. • ABC Analysis: • A method used to identify and define inventory items based on their usage. • Focuses efforts based on the products that will have the greatest inventory turnover rate

7. Inventory Management Definitions • 80/20 Rule: • 80% of a pharmacy’s drug costs are derived from 20% of the pharmaceuticals carried. • Focuses on inventory control of the top 20% of the items carried. • Inventory turnover rate: • The cost of goods sold over the average inventory value • The larger the # of inventory turns indicates better utilization of financial resources of an institution

8. What are the types of different suppliers a pharmacy can use for the acquisition of medication?

9. Suppliers • Wholesale drug distributors • Stock medications from all manufacturers • Manufacturers • Allows pharmacies to purchase in bulk, resulting in a savings for the company • Other pharmacies

10. Receiving Inventory • Upon delivery, a technician must verify accuracy of the received order with the original purchase order and the packing slip. • Drug name and manufacturer • Strength and dosage form of the medication • Appropriateness of packaging type • Quantity • Number of units received vs. number ordered • Damaged inventory • Should always document incorrect products or product shortages • Controlled substances require additional documentation

11. Storing Inventory • Technicians must learn which products require special storage conditions (i.e. refrigeration) • Stock rotation procedures are VERY important! • Items that expire soonest should be placed in the front.

12. What are the different types of inventory counts?

13. Types of Inventory Counts • Initial • Accurate inventory of all controlled substances taken before a new pharmacy opens or when there is a change in PIC • Biennial: • Inventory required by DEA of all controlled substances every 2 years • CII- must be exact, CIII-CV, may be estimated • Perpetual: • Inventory that reflects exactly what is on hand at a particular time • Most commonly performed on CII medications • Physical: • An inventory conducted on a basis (typically yearly) to determine exactly what is on hand at a particular moment in time and the value of the inventory based on the current cost of that item

14. Medication Disposition • Recalls • Can be initiated by the manufacturer or the FDA • Class I- reasonable probability that use or exposure will cause serious consequences or death • Class II- use or exposure may cause temporary or reversible adverse consequences, with a remote possibility of serious consequences • Class III – use or exposure is not likely to cause adverse consequences • Expired medications • In many cases, pharmacies return expired, discontinued, recalled, or unusable products to the seller, and get a partial credit on return • Some medications cannot be returned- need to dispose of in accordance with federal and state laws and regulations. • Each pharmacy’s policy/procedures regarding expired medication is different

15. FDA Approved: How the FDA approval process works • Whiteboard discussion!!

16. Financial Accounting Terminology • Be sure to learn & familiarize yourself with the terms listed on pages 196-197 of Mosby’s Review for the Pharmacy Technician Certification Exam!