Medicines are special commodities and fall under essential goods. Subsequently, a dire situation may arise if they go out of stock affecting patients due to nonavailability of the much-needed dosage. Non-availability of the prescribed medicines for the patients poses health risk. Hence, in the pharma industry inventory management is a crucial process that guarantees availability of essential medicines while keeping prices and waste at minimum. It is composed of pharma product’s thorough tracking, storing, and ordering for maintaining an ideal balance between manufacturing, demand, and supply. Efficient inventory management prevents shortages that might jeopardize the health of a patient, product’s shelf-life management, and obey strict regulatory requirements. By utilizing data analytics and advanced technologies, pharmaceutical manufacturers can augment their accuracy of inventory, lower inefficiencies in operations, and eventually improve outcomes of patient care.
- Ensuring Availability of Drug: Pharmaceutical manufacturers are ensured by successful inventory management so that they have adequate supplies of drugs for global clinical trials, maintaining timelines of study and avoiding delays.
- Compliance with Regulations: Inventory’s proper documentation and tracking helps meeting rigorous regulatory requirements in diverse countries, guaranteeing the compliance and integrity of global clinical trials as well as the imported medicinal product’s availability in the marketplace.
- Cost Efficiency: Streamlined inventory management minimizes waste and reduces costs associated with overstocking or stockouts, optimizing resource allocation in the market. This is also applicable in global clinical trials.
- Inventory Just-In-Time: System of inventory known as Just-In-Time (JIT) are implemented by pharmaceutical manufacturers to lessen the costs of holding and curtail the drug obsolescence risk, ensuring the products delivery on time while complying with regulatory standards.
- Collaborative Forecasting: In pharma effective inventory management depend on close association between distributors and pharmaceutical manufacturers to accurately forecast demand, optimize levels of stock, and avoid situations of shortages or overstock, enhancing the efficiency of supply chain and safety of patients.
The types of inventory management used in the pharmaceutical industry, outlined in bullet points:
- Just-In-Time (JIT) Inventory Management
- Reduces storage costs by ordering only as needed.
- Minimizes waste of perishable items
- Requires precise forecasting and reliable suppliers.
- ABC Analysis
- Categorization of inventory is made into three classes: high value as A, moderate value as B, and low value as C.
- Focus is on the management of A items more closely due to their greater impact on complete costs of inventory.
- (FIFO) (First-In, First-Out)
- Ensures that firstly the oldest inventory is utilized.
- Prevents obsolescence and expiration of products.
- Particularly crucial for drugs having expiry dates.
- (LIFO) (Last-In, First-Out)
- Uses the most recently received inventory first.
- Less usual in pharmaceuticals due to shelf-life and regulatory considerations.
- Batch Tracking
- Monitors inventory based on batch or lot numbers.
- Essential for recall management and traceability.
- Helps in the maintenance of compliance with regulatory requirements.
- Consignment Inventory
- The supplier owns the inventory till it is utilized or sold.
- Reduces the pharma company’s investment in capital.
- Requires strong collaborations with suppliers.
- Perpetual Inventory System
- Continuously updates inventory records with each transaction.
- Provides real-time inventory levels.
- Typically relies on software systems for accuracy and efficiency.
- Safety Stock Inventory
- Maintains extra inventory to prevent stockouts.
- Acts as a buffer against disruptions in supply chain and demand variability.
- Forecasting Demand
- Prediction of future inventory requirements based on trends of the market and historical data.
- Helps in the planning of levels of inventory and easing stock in excess.
- (VMI) Vendor-Managed Inventory
- Supplier handles levels of inventory based on the parameters agreed.
- Can reduce administrative burden and optimize inventory turnover.
- Centralized Inventory Management
- Central control of inventory across multiple locations.
- Ensures uniformity and consistency in inventory management practices.
- Decentralized Inventory Management
- Each location manages its own inventory independently.
- More localized control and reaction to needs.
Here are the important advantages of Inventory management:
Ø Ensures continuous drug availability
Ø Reduces wastages and saves costs
Ø Enhances patient safety by maintaining market availability
Ø Regulatory compliance by ensuring availability of the goods
Ø Improves efficiency between manufacturing, supply, and distribution hubs
Ø Supports forecasting to help always maintain minimum inventory
Ø Reduces expiration and spoilage as there is continuous flow of inward and outward goods
Ø Facilitates batch tracking and recall management as every strip/box is tracked
Ø Optimizes storage space by ensuring optimum inventory levels
Ø Improves cash flow by continuous supply of goods to the marketplace
Ø Enhances customer satisfaction by ensuring availability in the market
Ø Integrates with technology and improves efficiency cycle
Ø Reduces theft and loss due to controls at various steps of supply chain
Ø Facilitates supplier management to ensure effectiveness
In the pharma industry, efficient inventory management is critical to ensure that important medicines are available, costs are minimized, and waste is reduced. By the employment of advanced technologies and implementing best practices, pharma manufacturers can sustain optimal levels of stock, enhance efficiency in supply chain, and comply with strict regulatory restrictions. Eventually, robust management in inventory adds to better outcomes of patients and supports the operation of healthcare providers overall to deliver on time and medical care to be relied upon.
