Every item on your shelves affects your profits. Too much inventory drains cash through storage, insurance, and depreciation. Too little? You risk stockouts and missed sales. Streamlining your inventory—through smarter tracking, leaner stock levels, and sharper forecasting—frees up capital, cuts waste, and keeps customers happy.
That’s why effective inventory management isn’t just about counting what’s in stock—it’s about creating a system that works for your business, your team, and your customers. In this blog, we’ll explore practical, easy-to-implement strategies to help you keep shelves stocked with the right products, at the right time, without tying up unnecessary capital.
Understanding inventory costs: holding, ordering, & stockouts
Inventory-related costs fall into three main categories: holding, ordering, and stockouts. Understanding these costs helps businesses design inventory strategies that strike a balance between availability and efficiency.
- Holding costs include storage, insurance, spoilage, and depreciation.
- Ordering costs involve administrative labor, shipping, and handling.
- Stockouts result in lost sales and customer dissatisfaction. Emergency restocking often incurs higher fees and stress.
Models like Economic Order Quantity (EOQ) and safety stock calculations help minimize total costs. Automating reorder points and improving demand forecasts ensure businesses maintain optimal inventory while preserving profit margins.
Implementing safety stock strategies for demand fluctuations
Safety stock acts as a buffer against unexpected demand surges or supplier delays. Unlike Just-in-Time systems, which carry risk in volatile markets, safety stock ensures business continuity.
To calculate ideal safety stock, assess lead times, service level targets, and demand variability. Using historical sales data and forecasting models can help refine these estimates.
Well-managed safety stock reduces the likelihood of stockouts and missed sales while minimizing excess. It’s a key tactic for companies that want to stay resilient and profitable in unpredictable conditions.
Tackling dead stock: How to identify & move it
Dead stock, unsold inventory sitting for six months or more, ties up capital and storage space. Regularly reviewing inventory turnover and sell-through rates helps identify these underperforming items.
To recover value, consider bundling with fast-sellers, offering markdowns, donating for tax credits, or returning to suppliers. Investigate root causes like inaccurate forecasting or outdated marketing.
Reducing waste through smarter forecasting & demand planning
Inaccurate forecasting leads to excess or insufficient stock, both of which eat into profits. Effective demand planning starts with analyzing historical data, seasonality, and market conditions.
Leveraging AI and analytics can improve forecast accuracy and responsiveness. These tools detect patterns and adjust for shifts caused by trends or disruptions in real time.
Cross-department collaboration ensures promotions and sales align with purchasing decisions. Forecasting improvements reduce markdowns, improve cash flow, and lower waste—directly boosting profitability.
ABC analysis: prioritizing inventory based on value
ABC analysis informs procurement, storage layout, and supplier negotiations. With proper implementation, this method improves inventory turnover and margin efficiency.
ABC analysis categorizes inventory into 3 categories. This lets businesses focus attention and resources where they matter most.
- A (high-value, low-volume)
- B (moderate value)
- C (low-value, high-volume) items.
For example, A-items may need tight controls and frequent reorders, while C-items require simpler processes. This targeted strategy prevents waste and ensures better use of working capital.
Cycle counting and regular audits: preventing shrinkage and errors
Cycle counting replaces disruptive annual inventory checks with smaller, routine audits. Prioritize high-value and fast-moving items for more frequent checks to maintain accuracy.
Mobile scanning tools and integrated software improve speed and reduce human error. Regular audits also help uncover theft, miscounts, or expired goods.
Auditing supports accurate reporting, better forecasting, and reduced shrinkage. When embedded into daily operations, cycle counting enhances visibility, boosts accountability, and protects profit margins.
Supplier management: building strong, flexible relationships
Reliable suppliers ensure steady inventory flow and minimize disruptions. Evaluate partners based on lead times, quality, and responsiveness, then build open communication channels for collaborative forecasting.
Strong supplier relationships lead to better pricing, priority during shortages, and more flexible order terms. Backup vendors and supplier integration tools further reduce risks. When suppliers become true partners, businesses can optimize stock levels, reduce waste, and respond faster to market shifts
Leveraging technology for inventory management and adherence
Inventory management systems (IMS) provide real-time visibility, automated reorder points, and accurate stock tracking. Technologies like barcodes, RFID, and cloud-based dashboards reduce errors and manual tasks.
Enterprise resource planning (ERP) platforms integrate inventory with purchasing, sales, and finance to streamline operations and improve forecasting. Advanced tools can predict needs, prevent overstocking, and enhance responsiveness. A well-chosen tech stack saves time, reduces holding costs, and increases margin potential.
Technology can also bridge the gap between patient behavior and inventory control. Automated refill reminders help patients stay on schedule with their medications, which in turn stabilizes demand patterns. Predictable refill cycles mean you can plan restocking more efficiently, reducing the risk of costly emergency orders and avoiding the excess inventory that often comes with trying to anticipate erratic refill habits.
A task manager adds another layer of control——such as running low-stock or upcoming-refill reports, setting reminders to refresh seasonal or promotional displays, or flagging items that need repositioning to encourage sales before they expire. It ensures your team follows through on both patient outreach and the inventory adjustments that come with it, so shelves stay stocked with what’s needed and slow movers don’t sit untouched.
Continuous improvement: monitoring KPIs and adapting strategies
Strong inventory management doesn’t stop once the shelves are stocked—it’s an ongoing process. Keep an eye on metrics like turnover rate, GMROI, days sales of inventory, and accuracy to catch issues early. Real-time dashboards and reporting tools help you track performance at a glance, while team collaboration and training keep improvements on track. By staying adaptable to market shifts and technology changes, you’ll not only protect efficiency but also keep customers satisfied and profitability growing over the long haul.
Ready to streamline patient reminders and boost your team’s efficiency?
Learn more about our Patient Relationship Management Platform—designed to help keep patients on top of their meds and pharmacy teams on top of their tasks.
