STOCK MANAGEMENT

SYSTEM

Derrick Wepukhulu
B Pharm
Objectives

• Understanding about establishing and maintaining stock

card & stock book.

• b) Ability to generate and utilize information on stock book

to generate orders for timely delivery of supplies.

• c) Appreciation of the importance of maintaining medicines

and supplies records
SCOPE c) Description of a stock book
a) Introduction to stock -Advantages of a stock book
management:
-Preparation of stock book
-Definition of stock management
-Using a stock book to analyse
- Principles of stock management consumption trends
systems
-Filling a stock book:
-Benefits of keeping good records
-Calculating average
monthly consumption
b) Definition of stock card
-Calculating maximum
- Advantages of stock cards and minimum stock levels
- Preparation of stock cards -Calculating months of
-Using stock cards stock
-Physical count
-How to conduct a physical count
Stock management tools

• Stock cards
• Stock book
• Dispensing logs
• Borrowing and lending records
• Expiry date tracking
 What is stock?
• These are the items (e.g. medicines) stored in the warehouse or
health facility. The main reason for keeping stock especially where
medicines are concerned is: to ensure the availability of essential
medicines at all times.
Types:
• Pipeline stock: stock that is in transit at various stages of the
purchasing and distribution cycles
• Quarantine stock: stock that has been physically received at the
facility, held separately and is not yet available for issue
• Safety stock: minimum stock kept on hand to protect against stock
outs
• Seasonal stock: stock that is purchased with the anticipation that it
will be needed at a later date, to satisfy seasonal demand.
• Working stock: stock that is on hand in the warehouse of health
facility store, that is issued to the pharmacy based on demand.
STOCK MANAGEMENT

• Stock management, also known as inventory management,

involves all the policies, procedures, and techniques used to
maintain the optimum amount of each item in stock. It
involves ordering, receiving, storing, issuing, and reordering
items. Stock and inventory management are the heart of
the medicines supply system.

• Stock control involves monitoring the supplies by various

reporting method including stock cards, stock books, and
calculating minimum and maximum stock levels.
Purpose of a stock management system
• An effective stock management system should ensure that the
right medicines of the right quality and quantities are available
at the right place, at the right time, and at the right cost.
Within public health institutions, the aim is to consistently
make safe, effective, quality, and affordable medicines and
health supplies available.
Principles of the stock management system

• Stock management enables you to track an item’s

consumption history to quantify future needs.

• It is therefore necessary to keep correct records of an item.

• The tools used to keep stock records are the stock cards and
the stock books.

• From these, you can determine average monthly

consumption (AMC), minimum stock, maximum stock, what
to order, and when to order.
Benefits of keeping good records

• Good records save time because—

• The expected quantity in stock is known before counting.

• The store can easily be handed over to a colleague; if you are no

work, others can understand the quantities of medicines and
Good records protect—
• The staff against accusations of theft or misuse of medicines and health
supplies.
• Against cases of disputed delivery because the arrival of medicines and
health supplies is always tracked.

Good records prevent—

• Under stocking and stock-outs because stock balances are known at all
times and items can be ordered in time to ensure availability
• Overstocking and wastage because large quantities of stock can be
redistributed before it expires.

Good records allow estimation of the cost of medical supplies for the
year so a budget can be prepared
What is inventory?

• Inventory is defined as the sum of all items held in stock.

• Inventory management: involves the procedures that

manage how medicines are ordered, received, stored,
handled and distributed to other facilities or dispensed to
users at service delivery points.

Purpose of inventory management:

• To ensure a continuous supply of quality medicines to users
whenever and wherever they are needed.
 Starting a stock management system
An easy way to start a well-organized store room and stock management
system is by following these steps—
1. Enter all the consumable items the health facility uses into a new stock
book using the NMS or JMS catalogue or order notes to get item
information.
2. Take the stock book to the store room and arrange all the items on the
shelves in the same order they are recorded in the stock book.
3. Make a stock card for every item and record the exact number of units on
the shelf as the balance. Place each card next to its item on the shelf.
4. Identify one person to set up and be responsible for the store room.
5. Teach everyone in the department or clinic how to record on the stock
cards, in case the person manning the store is away.
6. After a month, you will be able to estimate AMCs for each item. Record
this on the stock card and in the stock book.
 STOCK CARD
• Stock cards also known as bin cards: cards used to record when and
how the medicine is used.
• Stock cards: always kept with the medicine on the shelf.

ADVANTAGES OF THE STOCK CARD

• Accountability; Stock cards quickly show how much stock is on hand
and help to monitor stock to prevent losses or theft
• Calculation of consumption; Stock cards show exactly how much of
each item moves in and out of the store over a period of time and
which department has used it. The average monthly consumption and
the maximum stock level, which tell you when to order and how much
to order, respectively, can easily be calculated.
Stock card

• Each commodity in the store should have a stock card in the store,
including surgical items. You should have a separate stock card for
similar items if they have—

• Different pack sizes (e.g., paracetamol 500 mg pack of 100 tablets

and paracetamol 500 mg pack of 1000 tablets)

• Different strengths or weights or volumes (e.g., co-trimoxazole

400/80 mg and 200/40 mg [paediatric] tablets or cotton wool 500
g and cotton wool 200 g)

• Different formulations (e.g., amoxicillin syrup and amoxicillin

capsules)
How to prepare stock cards
• Stock cards track the movement of medicines and health supplies in
the stores and one card should be kept for each item in the store.
• Each time a transaction takes place, it must be recorded on the
stock card; for example, receipt of new stock, lending to another
facility, or physical count.
• Information on the stock card facilitates the management of
inventory at the facility.
• The stock card is filled in by the person in charge of the store (store
manager, store keeper etc.) or the person who carried out a
particular transaction at that time.
Instructions for filling in a stock card follow:

1. When starting a new stock card, complete the header information.

Health unit name & Health unit code: the health unit code provided by
the MOH
2. Item description: comprises the following information
a. The name of the item; this should be the generic name (e.g., co-
trimoxazole, zidovudine)
b. The dosage form/formulation (tablet or syrup)
c. The strength: (480 mg tab). For lab items, write the strength of the
reagent (e.g., 50% acetone–alcohol decolorizer).
3. Pack size: fill in the pack size of the item (e.g., tin of 1,000 tabs of
paracetamol).
4. Code no.: the official number of the item as given by the medical store
5. Special storage conditions: indicate if any items require special storage
conditions (e.g., refrigeration)
6. Unit of issue: the smallest unit of the item issued from the store (e.g. 1
of 1,000 tablets)
7. AMC: the quantity of items consumed per month called average
monthly consumption
8. Maximum stock level: the largest amount of stock that should be held
by the facility, expressed in quantity (i.e., number of pack units) for
medicines (five months) and antiretrovirals (four months)
9. Minimum stock level: the lowest amount of stock that should be held
by the facility( is always two months)
10. Date: record the date when the transaction (receipt or issue) is made;
each transaction should be recorded on a separate row
11. To or from: write in the location where the product is coming from or
is being sent to
12. Voucher number: any transaction (except a loss or adjustment)
should always be accompanied by a voucher.
13. Quantity in: record the number of packs of the item received (e.g., 5
tins )
14. Quantity out: record in pack units the amount of an item being given
out
15. Losses/adjustments: refers to any issue out of the store for reasons
other than consumption within the facility ( Changes in your stock due
to removal of expired items, damaged items, theft, or adjustments to
stock numbers during stock-taking, redistribution to other facilities
should be recorded as a loss (inserting the negative sign [−] before the
figure)
16. Balance on hand: the balance on hand after adding quantities
received or subtracting quantities issued or making adjustments for
losses from the previous stock balance
17. Expiry date: the expiry date for each new item received should be
written in the given space
18. Batch no.: record the batch or lot number indicated on the
manufacturer’s packaging every new item received
19. Remarks: record any necessary comments, notes, or explanations
(i.e., physical count)
20. Initials: the person updating the stock card should fill in his or her
initials
 NOTE
The following information must always be filled in on the stock card:
• header information,
• Item description,
• quantity in or quantity out,
• adjustment,
• balance and
• Batch Number
• Initials
Keep used stock cards for at least six years in a file or in a clearly labeled
envelope,
HOW TO USE STOCK CARDS

1. Preferably place each card on the shelf next to the item.

2. Alternatively, have stock cards in a box file. The box file must be in
the store and the stock cards put in an organized manner to easily
find the right card.
3. However, all issue or receipt transactions must be recorded
immediately it is much easier if the cards are kept next to the items
and not in a box file. You minimize the risk of forgetting to update
the cards if it is kept next to the item.
4. Count the number of units that you have in stock and fill that
number in under the “Balance on hand” column on the first line.
5. Do not forget to date and initial the entry. For example
 Prepare stock card for the following
• Busamaga HC IV, Code UGBUNY01 had a transaction of Metronidazole
200mg Tablets, Pack size 1000 for a period of 2 months, unit of issue was 1
tin of 1000’s. The AMC is 28
• 4/6/17- Physical count 5tins Expiry date Jun/19 Batch No LK005
• 20/6/17-NMS delivered Voucher–N0037 40tins Exp 9/19 Batch FTR560
• 22/6/17-to Dispensary Voucher-23 9 tins
• 28/6/17- to OPD Voucher-26 8 tins
• 3/7/17 – to OBS & GYN Voucher-27 5 tins
• 4/7/17 – to Surgical ward Voucher-29 7 tins
• 4/7/17 – to MCH Voucher-30 2 tins
• 6/7/17 – 2 tins break and spill on floor
• 11/7/17-to Dispensary Voucher-33 7 tins
• 12/7/17 – KPI donates KPIV34 30 tins Batch KPI005
• 14/7/17 – Lends to Bukuku HCIII Voucher-35 20tins Batch KPI005
• 15/7/17 – to OPD Voucher-36 6tins
• 17/7/17 - NMS delivered Voucher N0089 35tins Exp 9/19 Batch
FTR560
• 25/7/17 – to Male ward Voucher-37 2tins
• 30/7/17-Mental unit Voucher-39 2tins
• 30/7/17- OPD Voucher-42 9tins
• 3/8/17- Bukuku HCIII returns 20 tins BUK58 exp 20/20 batch YUY08
• 4/8/17 –Dispensary Voucher-54 10tins

• Prepare stock card for the above information 20 marks

 THE PHYSICAL COUNT
• Once a month, at about the same time every month and conduct a
physical count (i.e., count the amount of actual stock on the shelf
and record the balance on the stock card). Draw a (red) line under
last balance entered on the stock card and mark the entry “physical
count” (or PC) to indicate that a physical count has been done.

The purpose of a physical count is to;

• Verify the stock level of medicines and health supplies
• Verify the accuracy of stock-keeping records
• Detect losses of medicines and health supplies in the store
• Ensure all stock in the store is usable (not damaged or expired)
• Determine whether the stock will be used up before the expiry date
or if you need to take action to redistribute.
 Physical count
• When possible, the storekeeper and another member from facility
management should conduct the physical count because it makes the task
more accountable and easier with one recording and one counting.
• If the actual number (quantities) available does not equal the amount or
the balance stated on the stock card, you should record the actual amount
(physical count) and then investigate the discrepancy.
Do this by—
Checking the entries and arithmetic since the last physical count.
Checking with other staff members and ensuring all entries have been
made.
Checking quantities dispensed in the dispensing log against the entries on
the stock card.
Notifying your supervisors (e.g., in-charge, administrator, pharmacist,
pharmacy technician, and DHO).
Involving the police if necessary.
Write your initials after conducting the physical count. If a discrepancy is
found during the physical count and no obvious errors are found after
checking, then the actual loss or gain has to be indicated on the stock card
 HOW TO CONDUCT A PHYSICAL COUNT

1. Set a date for the physical count. Select the physical count team.
Participants should be selected from the facility. The storekeeper and
pharmacist, if available, should be members of the team.
2. Prepare the store, make sure all cartons are neatly stacked and partial
cartons are clearly visible.
3. Count unopened/complete cartons first. Multiply the number of cartons
by the number of units in the carton. This will give the total number of
medicine/item units in the carton.
4. Count open cartons. If an open carton contains unopened boxes, count
the boxes and multiply the number by the number of units in a box. This
will give the total number of the item units in the unopened boxes.
5. Count all the units that are in open boxes.
6. Add up the total units from the unopened cartons, unopened boxes,
open boxes on shelves, in drawers, etc. This will give the total number of
units of the items available in the store and dispensing facility, known as
the actual quantity on hand.
7. On the stock card for the item, draw a line with a red pen through the
next row of the stock card after the last calculated stock balance.
8. Record the date of the physical count in the next row; fill in the actual
stock on hand under the stock balance column. Write any comments for
losses or adjustments under the remarks column.
9. Write your initials after conducting the physical count. Draw another
line under the row. This differentiates the physical count from the
routine entries on the stock card.
• The physical count also provides a good opportunity to check the
expiry date on all your supplies.
STOCK BOOK

• It is important to know which items the facility needs to stock.

• these items should have a stock card and be recorded in the stock
book, one on each page.
 ADVANTAGES OF THE STOCK BOOK
• Gives you a list of all the items in the stock control system; it is a
reference book and by using it, items will not be left out accidentally
• Is used to do the physical count to ensure that no item is left out
• Is a resource book of all the information needed for ordering; you can
sit in one place and write the order without running to the store many
times
• Reduces the chances of making mistakes such as using the wrong
codes
• Allows you to easily check if an order has been placed for an item
• Tells how much has been used, how much has been ordered, and
when and how much needs to be ordered
• Makes it easier to calculate the adjusted AMC
• Summarizes the whole stock control system, providing an easy
overview of transactions
 HOW TO USE A STOCK BOOK
• Update each page of the stock book once a month after the physical
count and preferably just before ordering supplies. Take your stock book
and go to the store room. Use the information on the stock cards to enter
the following information:
Date: The date when you are updating the stock book
Previous physical count: Last month’s physical count (the balance brought
forward)
Quantity received: Total quantity of stock received since the last monthly
physical count (between the last two [red] lines on the stock card)
Quantity issued: Total quantity of stock issued since the last physical count
(between the last 2 (red) lines on the stock card)
Days out of stock: Number of days the item was out of stock during the last
month (0 stock on the stock card)
Losses and adjustments: Total losses or adjustments reflected on the stock
card during the previous month
Balance on hand: This month’s (current) physical count (the new stock
balance)
Adjusted AMC: Every month you should calculate the monthly
consumption adjusted for stock out days (adjusted MC).
Maximum stock quantities: The maximum stock quantity is five months
for essential medicines, four months for ARVs, and three months for
laboratory chemicals and consumables; multiply the AMC by five to get
the maximum stock quantity
Quantity to order: The order quantity is determined by subtracting the
current stock balance from the maximum stock quantity; quantity to
order could be nil if the current stock balance is more than the maximum
stock level
Remarks: Add any remarks or comments you may have.
Initials: Add your initials after filling in the information in the row.
Adjusting AMC on the stock card. Whenever you have calculated a new
adjusted AMC and it has changed from the previous calculation you need
to update the AMC on the stock card
Calculating Average Monthly Consumption
Calculating Months of Stock

• Months of stock is the number of months a product will last based on

the present consumption rate
• By reviewing stock status, you will be able to determine if the facility
or unit is under-stocked, overstocked, or adequately stocked. If
under-stocked, it may be necessary to place an emergency order. If
overstocked, it may be necessary to redistribute the stock to other
facilities.
• To determine the months of stock or how long your stock will last,
divide the stock on hand by the AMC to obtain the months of stock.
 Calculating Maximum and Minimum Stock
Levels
• Maximum stock is the quantity of an item that should not be exceeded
in the store. It is equivalent to five months of stock. Keeping more than
five months of stock means that the facility is keeping a lot of funds in
the stock, and these funds could have been used to procure other items.
In addition, this increases the chances that items will expire and may, in
some cases, lead to misuse, theft, or burglary.
Maximum stock level = AMC × 5

• The minimum stock is the amount of supplies below which the quantity
in stock should not go. In Uganda, this value is two months of stock.
There is a risk of stock-outs when health commodities go below these
levels.
Minimum stock level = AMC × 2
Establishing and Maintaining Ledger
Book
a) Definition of ledgers and ledger systems
b) Advantages of ledger system
c) Establishment of a ledger system
d) Filling a ledger
What is manual stock recording?

• It is the physical entry, of when and how a medicine is used, into a

stock card, i.e. making an entry into the stock card every time a
medicine moves in or out of the store or pharmacy
Types of manual stock records

Vertical file system: file cards are stored vertically in alphabetical or

numerical order in a card file or drawer.
“Kardex” system: file cards are stored in a visible-edge record tray
system.
Bin cards: file cards are physically kept with the stock.
Ledger system: records are kept on ledger sheets in a bound or loose-
leaf book.
Applying Electronic Inventory
Management System
ASSIGNMENT:
a) Use of computers in pharmaceutical inventory management
b) Commonly used software packages
c) Electronic communications:
- Forms
-Advantages and limitations
- Precautions
d) Web-based reporting
END.