Pharmacy Stock Management: How to Stop Stockouts and Expired Stock

A hospital pharmacy fails in two opposite directions at once: it runs out of the drug a patient needs today, and it holds a shelf of something that expired last month. These look like separate problems — a shortage and an overstock — but they are the same failure seen from two sides. Both come from decisions made on partial information, usually a stock card that is a week behind reality.

The root cause is not the ordering, it is the counting

Ask a pharmacist why a drug went out of stock and the answer is almost always that the reorder came too late. Ask why it came too late and the answer is that the quantity on record did not match the quantity on the shelf. By the time the mismatch is noticed, the order is already late.

Dispensing, breakage, samples, returns to supplier, expired items removed and stock taken for staff — every one of these changes the shelf without necessarily changing the book. A count that drifts ten percent will produce both stockouts and expiry write-offs, because it will reorder the wrong things in the wrong amounts.

Classify before you optimise

Not every item deserves the same attention. The standard split:

• A items (about 20% of lines, 70–80% of value) — high-cost or high-turnover. Count these weekly and reorder on a written rule.
• B items — moderate on both. Count fortnightly.
• C items (the long tail) — cheap, slow. Count monthly; a stockout here is an inconvenience, not a crisis.

Spend the discipline where the money and the clinical risk are. Applying weekly counts to a shelf of plasters is how the habit dies in month two.

Set reorder points that include lead time

A reorder point is not a guess. It is arithmetic:

Reorder point = (average daily usage × supplier lead time in days) + safety stock

The lead time is the part most pharmacies skip. If the supplier delivers in seven days and the drug moves twelve units a day, ordering when stock hits twenty means it hits zero on day two of the wait. Add a safety stock sized to the variability of demand — a drug with spiky usage needs a larger cushion than one that moves evenly.

Two refinements that matter in a hospital:

1. Seasonality. Antimalarials, respiratory drugs and rehydration supplies move on the weather, not on last month's average. Review A items before the season turns, not after.
2. Clinic-driven demand. A new consultant running a different protocol will change the curve overnight. Ordering rules that only look backwards will not see it.

FEFO, not FIFO

First-expired-first-out is the correct rule for medicine; first-in-first-out is the correct rule for soft drinks, and the difference is why pharmacies write off stock. Under FEFO the batch with the earliest expiry leaves first regardless of when it arrived.

Practically:

• Shelf arrangement follows expiry, not delivery date.
• Receiving checks dates and rejects anything too close to expiry to be consumed — a delivery of short-dated stock is a future write-off with a purchase order attached.
• Any batch inside a defined window (commonly 3–6 months) is flagged for promotion to the front, or for return where the supplier allows it.

Reconcile dispensing against stock daily

This is the habit that makes everything else true. At close, three numbers should agree:

1. Opening stock plus receipts, minus closing stock.
2. What was dispensed, as recorded.
3. What was charged, on the invoice.

All three are different views of the same day. When they disagree, something left the shelf without being recorded — and the earlier you catch that, the smaller it is. Reconciling monthly lets a month of leakage accumulate; reconciling daily makes it a five-minute conversation.

Watch expiry dates before they become write-offs

A monthly report of items expiring within 90 days gives a pharmacist time to act: return to supplier where permitted, reallocate to a site that will use them, or run a controlled promotion. The same report produced quarterly is a post-mortem.

What to track

Metric	Why it matters
Stockout incidents per month	The clinical cost — patients turned away or switched
Expiry write-off value per month	The financial cost of poor rotation and over-ordering
Stock count accuracy	The input that makes every other number trustworthy
Stock turnover (times per year)	Slow turnover flags both dead stock and over-buying
Items expiring within 90 days	Your advance warning — act, do not archive

You cannot order correctly from an incorrect count. Fix the reconciliation first, and most of the ordering problems resolve themselves.

Where to start

Run one full reconciliation this week — count the A items, compare to the book, and find out how far apart they are. That number decides everything else. If you would rather start with the system already doing the reconciliation, see how dispensing and stock connect, book a walkthrough, or open a free account and watch a dispense decrement stock in real time.