How pharmacies lose money to expiry, and how FEFO stops it

When a pack expires on the shelf, the loss is not the profit you would have made. It is the whole amount you paid the supplier, plus the shelf space it occupied, plus the disposal.

That distinction matters more than it sounds. If a pack cost you 800 shillings and you sell at a 25 per cent margin, writing it off does not cost 200 shillings of missed profit. It costs 800 shillings of money already spent, and you now need roughly four more sales of the same product just to get back to where you were before the write-off.

That multiplier is why a pharmacy can be busy, price sensibly and still feel like it is not making money. Expiry does not show up as a bad day. It shows up as a slow leak.

Expiry is rarely carelessness. It is usually one of these:

• New stock goes in front. A delivery arrives during a busy hour and is put on the nearest edge of the shelf, so the newest batch sells first and the oldest works its way to the back.
• The system counts products, not batches. If the software knows you have 40 packs but not that 12 of them expire in March, nobody can act on it.
• A slow mover was over-ordered. Often because a supplier offered a better unit price on a larger quantity.
• Nobody owns the check. Everyone assumes the person who opens up looks at dates.

FEFO is first-expiry-first-out: of the batches you hold of a product, the one that expires soonest is the one that leaves the shelf next. It is not the same as first-in-first-out, and the difference is real. A batch delivered last month may well expire before one delivered a year ago, because it was already near the end of its life when it reached you.

Doing FEFO properly needs one thing above all: stock recorded per batch, with the expiry date attached, rather than a single quantity per product. Once that exists, dispensing the shortest-dated batch is a rule the system can follow by itself, instead of something you hope a busy cashier remembers.

The routine that works is the one short enough to survive a busy month. Ours is four steps:

1. Run a short-dated report covering the next ninety days. Ninety days is long enough to act and short enough that the list stays manageable.
2. Walk the shelves with it. Move the short-dated packs to the front and face them. This single step prevents most expiry.
3. Decide on each line: discount it, promote it, move it to a branch that sells it faster, or ask the supplier about return terms. Decide now, while there is still time for the decision to work.
4. Adjust the next order. A line that reached the short-dated list twice is a line you are over-ordering.

Pair it with a full count when you can. A stock take finds the differences a report cannot see, and it is worth doing before the list stops matching the shelf.

The cheapest place to prevent expiry is the moment the delivery arrives. Record the expiry date of each batch as you receive it, and refuse or query stock that arrives with an unreasonably short life. A supplier clearing their own short-dated stock into your pharmacy has moved the loss onto you, and the time to notice is at the door.

It takes a few seconds per line at receiving and it is the difference between knowing what you hold and guessing.

We built Optima around this problem, so this section is about our product. Stock is held per batch with its expiry date, captured when you receive the delivery. Dispensing allocates from the shortest-dated batch automatically, so FEFO happens whether or not the person at the till is thinking about it.

Expiry reporting is built in, so the ninety-day list above is a report rather than a spreadsheet you maintain by hand, and there is a stock take for the full count. All of it runs on the pharmacy’s own computer, so none of it depends on a connection.

You can try the whole thing on your own stock for seven days before paying anything, or read the buyer’s guide for the questions worth asking any vendor, including us.