In pharmacy operations, accuracy in received goods is crucial. Pharmacies, already under pressure from tight margins and complex regulations, often face financial losses due to discrepancies between the actual value of goods received and the amount invoiced by vendors. These discrepancies can arise from several unintentional vendor errors:
- Packing Errors: Vendors may pack a lower quantity of an item than what was ordered.
- Shipping Mistakes: Sometimes, an item may not be shipped at all.
- Invoicing Errors: Vendors might invoice a higher price than the contracted or negotiated rate.
- Miss-Picks: Incorrect items might be shipped, but the pharmacy is still billed for them.
While these mistakes are usually unintentional, they can lead to significant financial losses for pharmacies if not addressed promptly. The onus falls on pharmacies to identify these errors, communicate them to the vendor, and ensure they are corrected—all while maintaining proper documentation of the discrepancies.
The Financial Impact
The financial implications of these discrepancies can be substantial. In 2023, pharmacies overpaid by an average of 0.35% of their total Cost of Goods Sold (COGS) due to invoiced products not received. Some pharmacies experienced variances as high as 1.7%, which is nearly five times the average. For a pharmacy with an annual purchase volume of $3 million, this discrepancy could result in a loss of almost $7,000 annually. These seemingly small percentages add up, emphasizing the importance of accuracy in every transaction.
SureCost publishes its Smarter Purchasing Report each year to highlight how pharmacies save money and optimize their work. We collected anonymized purchasing data from over 200 of our customers, which was a cohort of pharmacies across the country working in both retail and long-term care (LTC).
We removed outliers to standardize this data for an accurate “apples to apples” comparison. We also collected quantitative data through customer interviews. In the table below, you can see how much pharmacies are overpaying.
Ensuring Accountability and Accuracy
Pharmacies need reliable systems to ensure they receive the correct products at the agreed-upon prices. One effective solution is to integrate tools that streamline and enhance the accuracy of this process.
SureCost offers a powerful solution for pharmacies by integrating with existing systems such as accounts payable and pharmacy management systems. This integration allows pharmacy teams to instantly compare invoices against purchase orders as soon as items are received. Here’s how SureCost helps ensure accountability and accuracy:
- Instant Verification: By providing a single interface, SureCost enables pharmacies to quickly verify that they received the right products in the correct quantities and at the negotiated prices.
- Streamlined Workflow: The integration with existing systems helps create a seamless workflow, reducing the administrative burden on pharmacy staff and minimizing the chances of errors.
- Efficient Issue Resolution: With an integrated system, discrepancies can be identified and rectified more efficiently, reducing the time and effort required to resolve issues and ensuring that pharmacies do not incur unnecessary costs.
The Path Forward
While vendor errors are often unintentional, the impact on a pharmacy's finances can be significant. To avoid financial losses due to vendor discrepancies, pharmacies must implement robust systems and processes for tracking and verifying received goods to safeguard their profitability and maintain smooth operational workflows. Investing in accurate and integrated systems like SureCost is not just a matter of financial prudence but a strategic move to enhance overall operational efficiency.
