Lower Your Inventory & Grow Sales

  • RetailerShakti
  • April 11, 2023

What is Inventory?

Every medicine shop or pharmacy, whether it is standalone or a part of a medical facility, must maintain and manage the right level of inventory. The pharmacy's supply chain and inventory may be subject to a variety of factors that raise costs while lowering profitability. For that reason, it is important to properly project the demand for stocking goods as well. Excess inventory can result in loss of value as the majority of pharmaceutical items, such as - medicines, OTC products etc. have a moderate shelf life. On the other side, understocking can lead to losing sales opportunities. A pharmacy is also required to handle critical issues such as appropriate storage, expiration dates, and so on. Thus, it is crucial for a pharmacy to efficiently manage the whole inventory.


Working capital management is a key component of any business, including the pharmacy’s sales and profits. It includes a number of vital areas of inventory management. Large inventories need a large space as well as a significant amount of capital. To prevent making superfluous or insufficient investments, efficient and effective inventory management is required in pharmacies. Having too much inventory in a medicine shop can limit the working capital that may be used for other kinds of assets.


As we know, ordering, stocking and utilizing the supplies or goods of a pharmacy are all parts of inventory management. An essential component of smooth operation in a medicine shop/ pharmacy is effective inventory management. Minimizing the various expenses involved with maintaining inventory lowers the cost of operations and, as a result, boosts the pharmacy’s profitability.


Inventory and Sales

Making decisions about inventory that reduce the overall cost of inventory is the goal of an inventory control system. This is different from inventory minimization. At a pharmacy, running out of an item is frequently more expensive than just keeping extra units on hand. For instance, if a consumer at a retail pharmacy is unable to get their medication, they can go somewhere else, costing the store future sales. So, it is important to maintain the right amount of inventory to maintain the working capital of the pharmacy and increase sales as well


  • Working capital investment is the term for funds that have been used for inventories.
  • The return on inventory investment should be everyone's priority.
  • Reducing the inventory is essential to boosting the store's revenues.
  • Lowering the inventory will make more room for merchandise that will probably sell more quickly, boosting sales and earnings.
  • To improve working capital turnover, stock only the next few days' worth of high-demand items and minimize working capital.


Working Capital Turnover = Net Annual Sales/ Average Working Capital.


How Buying on Credit Can Impact Your Revenue?

  • You could lose 1%–2% on purchasing margins while using credit.
  • If you pay cash, you will receive a 1-2% cash discount. This is your revenue.
  • Make regular, little purchases. With less money spent on inventory, this will increase profitability and produce greater purchasing margins.
  • Buy with cash or make minor purchases on credit to have peace of mind.
  • Reduced Burden on Expiry of Goods / Purchase Return – it saves administrative work/ Capital/ Loss of Inventory / Vendor Relationship



How to Optimize Inventory?

Forecast demand using your recent sales and seasonality

  • Examine your 30-day sales history and see what products and medicines are selling in your locality.
  • If you have seasonal products like for winter or flu season, review your inventory and return the products to your distributor.
  • Consider the Top 50 SKUs that have sold the most during the last 12 months.
  • Analyze in which part of the Month the sales are highest.
  • List the items that were sold during that time.
  • Review the list every 3 months.


Invest in ERP

  • Spend less time managing inventory and more time on the counter.
  • Many ERP options are now accessible that are either free or inexpensive.
  • Invest in these applications to digitize your sales and inventories.
  • Identify products which are slow-moving, fast selling, and about to expire.
  • Identify products which will be stocked out in the next three days.
  • Automatically generate wanting book orders every day.


Employ the Pareto Distribution

  • In reality, only 30-40% of your SKUs will account for 80% of your sales.
  • Many SKUs in a lineup are only there to offer customers more choices.


Smaller Order Sizes

  • In order to optimize cash flow and inventory reduction, the firm can benefit from placing smaller, more regular orders for inventory.
  • Ease of verifying the purchases immediately.


How Can Retailer Shakti Help You?

  • It has the widest product selection – you can purchase all SKUs from a single source.
  • You can avail of free delivery over just Rs. 1000 order. Order only what is needed for the next 2-3 days.
  • Order small quantities. No MOQ.
  • Delivery on all 7 days. Guaranteed next-day delivery.
  • 24-hour order acceptance.
  • Purchase higher quantities of lot schemes. Improve margins.
  • Transparent pricing.
  • Returns are accepted without deduction. Return slow-moving products and free your shop space and inventory