Perpetual Inventory Management Creates Cash Flow Advantage for Pharmacy Owners

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Total Pharmacy JournalTotal Pharmacy September 2023
Volume 1
Issue 4

One Nebraska community pharmacy owner was able to save $20,000 in inventory costs.

For more on McKesson's Pinpoint Community Solutions, check back later today for our exclusive interview with Spencer Williamson, vice president and general manager, Supplylogix.

For Ashley Dendinger, PharmD, investing in McKesson’s Pinpoint Community Solutions service was a no brainer.

Like many other community pharmacy owners, Dendinger, the owner and pharmacist-in-charge at Plainview Family Pharmacy in Plainview, Nebraska, is concerned about the “double whammy” of DIR fees that pharmacists will be facing in 2024. “I think we’re all pretty well aware of the fact that it isn’t exactly rainbows and butterflies right now. In fact, it’s looking a little bit grim,” she said. “As a business owner and as a pharmacist-in-charge, I had to start looking for resolutions.”

During an exhibit hall PharmaTalk at McKesson ideaShare, held June 22 to 25 in Las Vegas, Nevada, Dendinger pointed out that like most other owners, the only 2 things in her control are her staff’s wages and her store’s inventory. With wages holding steady, Dendinger turned to inventory.

Diving in with both feet, she set up her perpetual inventory within her software provider, a process she described as “fine and dandy, but extremely time intensive,” spending an estimated 40 hours of after-hours work hours trying to identify and time reorder points, among other issues. During a spare moment, Dendinger logged in to her Health Mart franchise portal: “There’s was a big blue banner right in the middle of the screen that said, ‘Learn about our new solution, Pinpoint Community Solutions.’” Struck by the service, she signed up for a demonstration and was sold—even with the $2000 initiation fee.

When Dendinger implemented Pinpoint Community Solutions in March 2023, she estimated that she had approximately $90,000 in inventory in stock. After set up, she was shocked to learn that there was over $110,000 in inventory sitting on her pharmacy’s shelves. Within 30 days—“I would even venture to say it was maybe within 21 days,” she added—Pinpoint Community Solutions was able to help Dendinger drop her inventory costs by 19%, or close to $20,000.

“That’s $20,000 that’s in my cash flow, that I just had sitting on my shelves,” she said. Since that initial savings, Dendinger has made use of the Suggested Items and Suggested Returns features, which have helped her identify an additional $8000 of dead stock just sitting on the shelves—some of which, she noted, “were very expensive items. They were probably for a patient that either had to transfer out due to moving, or they were for a patient who, unfortunately, had passed away.”

Another feature Dendinger has taken advantage of? “It actually identifies when you have a full bottle on the shelf, and will make the suggestion that you send it back if it’s been 3 months since you’ve dispensed that medication.” Taking advantage of these notifications has helped Dendinger increase her inventory turns from 8 to 9 per year to 12 or 13 turns. “I don’t think it’s any big secret, but you’re going to want to be around 12 or 13 turns in order to stay above water,” she explained.

Like many software solutions, startup was labor intensive; Dendinger described it as the type of program where users get out of it what they put in. But, she added, the money she has saved made the initial set up well worth it. “With your inventory being that on point, it’s amazing how the cash flow just seems to appear,” she said. “It’s been a huge difference for me.” Her staff, including her pharmacy technicians, have taken ownership of the Pinpoint Community Solutions program and now more or less owns the inventory process, which now takes them only 5 hours a week. This, she explained, leaves much more time for patient care, from consulting with patients at long-term care facilities to administering vaccines to medication therapy management.

“I’m not worried so much about the dollar sign at the end of the day,” Dendinger said.

Reference
1. Dendinger A. The value of perpetual inventory management in optimizing cash flow. Presented at: McKesson ideaShare 2023; June 22-25, 2023; Las Vegas, NV.
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