Every pharmacy owner knows the two ways stock can go wrong. Order too much and boxes drift past their expiry dates, taking cash with them. Order too little and a patient leaves without the medicine they came for. Good inventory management is the discipline of steering between the two, and it rests on a handful of routines that any pharmacy can put in place without special software.
- Why the two problems feed each other
- Start with what you hold, and what it costs
- Rotate stock by expiry date, not by arrival
- Set a shelf-life rule with suppliers
- Sort products by value and by importance
- Reorder by sales and lead time
- Handle expired stock properly
- Keep the system simple enough to survive a busy week
Why the two problems feed each other
Expiry losses and stock-outs look like opposites, but they often share a cause: ordering based on habit instead of data. A shelf stuffed with slow-moving products ties up money that could have bought the fast-moving lines customers actually ask for. When cash runs short, the fast sellers run out.
Research from the public sector shows the same pattern. A review of medicine expiry in Ethiopia, which summarises earlier work in Uganda and Tanzania, lists overstocking (32.4% of expiry cases in that study), orders that did not specify a minimum shelf life (23.7%), and the absence of any first-in or first-expiry rotation (5.3%) among the causes. A separate Tanzanian study of antiretroviral supply found that short expiry periods contributed to stock-outs in 16 of 20 clinics surveyed, because stock that arrives with little shelf life cannot cover demand for long.
Most published evidence comes from hospitals and public facilities, not private community pharmacies, so the figures are a guide to the mechanisms, not a measure of your own losses. The first step is to measure those yourself.
Start with what you hold, and what it costs
Many pharmacies cannot say how much stock they hold or how much expired last year. Owners still planning a launch can start with Mfamasia’s guide to what to settle before opening a pharmacy. A simple monthly count of three numbers gives a baseline: the value of stock on hand, the value of stock expired or written off, and the number of times a requested item was unavailable. Recording those lost sales matters, because a pharmacy that tracks only expiry will drift towards under-stocking.
Rotate stock by expiry date, not by arrival
FEFO, or first-expiry, first-out, means the batch that expires soonest is sold first, whatever order it arrived in. It differs from FIFO (first in, first out) when a later delivery carries an earlier expiry date, which happens more often than most shelf layouts assume.
In practice this needs three habits. Check expiry dates when goods are received and write the earliest date on the shelf label. Place newer batches behind older ones. Walk the shelves every month and list anything expiring within three to six months. The window depends on how fast the product sells; a slow seller needs a longer warning.
Set a shelf-life rule with suppliers
Short-dated stock is a hidden cost. A product that arrives with four months left may be fine for a fast seller and a near-certain loss for a slow one. Agree a minimum remaining shelf life with each supplier, and write it on the order. Ask suppliers whether they accept returns or exchanges of near-expiry stock, and on what terms, before the first purchase and not after the first loss.
Sort products by value and by importance
Two classification methods are widely used in hospital pharmacies and adapt well to community practice. ABC analysis ranks items by the money spent on them: class A is typically a small share of items (often 10% to 20%) that consumes most of the budget (70% to 80%). VEN analysis ranks by clinical importance: vital, essential or non-essential.
Combining the two shows where attention pays off. An expensive, slow-moving item needs tight control and small, frequent orders. A cheap, vital medicine needs a safety margin so that it is never absent. A systematic review of hospital pharmacies found that ABC-VEN analysis was associated with inventory cost reductions of 35% to 60%. Those results come from hospitals with their own purchasing systems, so a small pharmacy should treat them as an indication of potential, not a target.
Reorder by sales and lead time
A reorder point tells you when to buy. The standard calculation is average daily sales multiplied by the supplier’s lead time, plus a safety stock for variation.
As a hypothetical example, if a pharmacy sells four packs of an antihypertensive a day, the wholesaler delivers in three days, and the owner wants two days of cover, the reorder point is (4 × 3) + (4 × 2) = 20 packs. When stock falls to 20, order. The figures will differ for every product, and delivery times in remote areas can be much longer, so use your own sales records and the delays you actually experience.
Handle expired stock properly
Expired medicines must leave the saleable shelf at once. Move them to a marked quarantine area, record the product, batch and quantity, and keep them apart until disposal. Controlled medicines need extra care and separate records; check current requirements with the regulator before disposing of them. Stock records also matter when a regulator withdraws a product, as in Mfamasia’s report on the TMDA ban on human medicines containing levamisole.
A study of household disposal practices in Mwanza noted that the only national guideline on expired medicines in Tanzania, issued by the Tanzania Medicines and Medical Devices Authority (TMDA), covers dispensing outlets, health centres and hospitals. Pharmacy owners should therefore obtain the current TMDA guidance and follow its steps for recording and destruction instead of relying on informal arrangements. Premises inspection checklists also look at record keeping, so well-kept stock records help at inspection as well as in running the business.
Keep the system simple enough to survive a busy week
A system that depends on one person’s memory will fail during leave or illness. Assign someone to the monthly expiry walk and the monthly count, write the routine down, and review the three baseline numbers every quarter. Software helps, particularly with batch tracking and expiry alerts, but the routine matters more than the tool. A paper stock card, kept up to date, outperforms an expensive system that nobody maintains.
Reducing expiry losses and stock-outs together comes down to knowing what sells, when it arrives and when it expires. Pharmacies that measure those three things usually find the savings come from small, repeated corrections, not a single large change.
