Community Pharmacy Management PDF

Community Pharmacy Management Legal requirements to setup a community pharmacy Site selection requirements Pharmacy designs and interiors Vendor selection and ordering Procurement, inventory control methods and inventory management Accountancy in community pharmacy: Day book, Cash book Introducti...

Community Pharmacy Management Legal requirements to setup a community pharmacy Site selection requirements Pharmacy designs and interiors Vendor selection and ordering Procurement, inventory control methods and inventory management Accountancy in community pharmacy: Day book, Cash book Introduction to pharmacy operation softwares: usefulness and availability Customer relation management Audits in Pharmacies SOP of Pharmacy Management Introduction to Digital health, mHealth and Online Pharmacies Learning Outcomes.. Know different aspects and concepts of managing community pharmacy. Understand organization, design and layout of retail and wholesale community pharmacy. Describe the legal requirements for establishment and maintenance of community pharmacy. Appreciate the importance of financial and materials management in community pharmacy. Establish and manage confidently the retail/wholesale community pharmacy.  Legal Requirements to set up the Community Pharmacy Minimum qualification: The minimum qualification required for registration as a pharmacist shall be a pass in Diploma in Pharmacy and satisfactory completion of diploma in pharmacy practical training [shall be not less than 500 hours spread over a period of not less than 03 months] Pharmacy Licence: A drug licence is required to start a pharmacy business. In India the CDSCO [Central Drugs Standard Control Organization] and the State Drugs Standard Control Organization are incharge of granting drug licences. The state drugs standard control organization is normally in charge of obtaining a drug licence in order to open a pharmacy.  Legal Requirements to set up the Community Pharmacy Minimum Space: The minimum desirable area to open community pharmacy is 10 sq. m. Storage facility: A refrigerator is required in pharmacy. This is essential because certain drugs like insulin, liquid antibiotics, vaccines and other medicines must be maintained at lower temperatures according to labelling requirements. Cupboards and drawers are also necessary for storing various pharmaceuticals and other things in pharmacy so that business may be run more easily and efficiently.  Documents Required to Open a Retail Drug Store Application(in duplicate) on form 19 of the Drugs & Cosmetics Rules, 1945 Challan of fee deposited for obtaining drug license Attested copy of diploma in pharmacy from any institution duly recognized by PCI Affidavit of a registered pharmacist or competent person working full time Affidavit of non-conviction of proprietor/partners/directors under the Drugs and Cosmetics Act, 1940 Map of retail drug store duly signed by proprietor/partners of firm A copy of the partnership deed in case of partnership firm Refrigerator purchase receipt  Business Site Selection Near to Locality Requirements Hotel, Thickely School, populated Cinema Residential Hall, Play area Ground SITE FOR A Drug Developing DRUG store areas STORE Parking Hospitals Flow of traffic 1] Business locality - Number of people visiting such locality is large. - If the drug store has good look it can attract good number of customers. - Main hindrance: huge investment because of high rented and exorbitant land prices. 2] Thickely populated residential area - People may prefer to buy the required medicines during their evening walk 3] Developing areas - In big cities new localities are coming up very fast. So there is no problem of competition. - Drug store will be able to meet the needs of its customers by extending all types of facilities. 4] Hospitals - The physicians who are having good practice and do not have drug store in their hospitals, it would be an ideal site to open a drug store 5] Flow of traffic - Avoid locations near traffic signals because a shop in the vicinity of traffic signals has to face parking problems for cars, scooters and cycles e.t.c. of the customers. - Roads having one way traffic must be avoided. - Road circles must be avoided as far as possible because of parking problems. 6] Parking - It must be seen that while selecting location of a drug store in a busy shopping centre, there is enough parking space outside the drug store. - In big cities there are certain restricted areas where parking is not allowed to prevent obstruction in smooth traffic. 7] Drug store - There should not be any competitor already existing near the location of a new drug store. - However if sales potential is good even for another store, then one can consider opening a new one. 8] Near to hotel, school, cinema hall and play ground - These locations are not preferable for starting drug store because, potential customers are residing quite at a distance from school premises, play grounds and hotels - Hotels: problem of maintaining cleanliness in the vicinity of drug store - Cinema hall: It is preferable to open a drug store near a cinema hall, in case cold drinks or ice cream facilities are also extended because people may buy drugs when they visit for a soft drink. To establish a new drug store in metropolitan cities like Delhi, Mumbai, Kolkata, Chennai e.t.c. the following additional factors are also considered. 1] Site should be connected with various mode of transport. 2] The site has good surroundings. There should not be congestion of traffic. 3] The essential services such as bank, post office and warehouse must be available near the site. 4] The rules and regulations of municipal corporation or any other local authority does not come in the way of expansion of drug store.  Pharmacy Designs and Interiors The first step in decorating a pharmacy or finding display furniture for medical store is to establish a pharmacy design. The best retail ideas and display solutions come from a professional architectural pharmacy design, for creating a little medical store or designing a large retail pharmacy. A good design can help to create a bright, comfortable environment for the customers and build effective display shelving for extremely active business.  Pharmacy Designs and Interiors The location and size must allow for anticipated personnel and inventory movement, as well as work processes and activities. Documents, bulk supplies, dangerous drugs and psychotropic substances, portable medical gas cylinders, refrigerated and cold- chain items must be housed in built-in storage and fixed equipment. The drainage and sewerage systems must be installed outside the building.  Objectives of Good Pharmacy Design 1] To attract large number of customers 2] To increase the sales of the store 3] To reduce the selling expenses to a minimum 4] To provide customers satisfaction 5] To project a professional image and improve general appearance 6] To minimize the movement of customers within the premises of the drug store 7] To provide surveillance in order to reduce the chances of pilferage and theft 8] To have space for reserve stock, office and resting place for the employees.  Pharmacy Structural Design a)Wall: i) The walls should be made of non-porous material and smooth plastered on both sides for simple cleaning. ii) The walls should be made of bricks or concrete blocks and must be permanent. iii) Washable antifungal paint (indoor) and weatherproof paint shall be used for wall finishing (outdoor). iv) Any opening in the wall should be designed and constructed to prevent rodents and other pests from entering. v) Skirting is required in the office and staff areas.  Pharmacy Structural Design b) Floor: i) To endure heavy weights and traffic, the floor must be constructed of concrete and smooth plastered, levelled, and finished with non-slippery heavy duty materials. ii) The floor should to be non-porous, damp-proof, and detergent- resistant. c) Ceiling: i) The ceiling shall be made of fire-resistant, asbestos-free and non-shedding materials or mineral fibres. ii) The minimum height between the floor and the ceiling shall be 12 feet to accommodate the height of the racks. iii) The ceiling shall offer acoustic balance and control for the room or space, preferably enhanced with sound absorption and attenuation.  Pharmacy Structural Design d) Roof: i) A pitched or slanted roof must be constructed to protect against severe rain. ii) The roof must be made of asbestos-free material, reinforced with wire mesh, and adequately insulated to reduce heat transmission into the building. iii) All windows and the loading/unloading area must have awnings. iv) The roof must be guttered and have a sufficient drainage system. v) The roof and ceiling must be constructed to deter theft and break-ins.  Pharmacy Structural Design e) Door: i) Every door must be made of fire-resistant material. ii) The doors must have two leaves and be wide enough to enable for free and simple flow of supplies and handling equipment like forklifts and trolleys. iii) To offer proper security, doors must be robust and strengthened, and double heavy duty locks must be installed. iv) Trolley guards must be installed on all doorways. v) All storage area doors must be fitted with an electronic access control system. vi) At the main entrance and loading bay, grille/roller shutters should be considered. vii) All emergency escape doors must be strategically placed and equipped with lighted emergency exit signage.  Pharmacy Structural Design f) Window: i) Windows are not permitted in storage areas. ii) Workstations, offices, and staff rooms all must have windows. iii) The window has to be a sliding or swinging type. iv) A metal grille should be installed on all windows.  Pharmacy Interior Design Inside the drugstore, the walls and ceilings are mostly white, which is more clean and neat, in keeping with the drugstore's image. Pharmacy shelves, in addition to the walls, are a focal point of interior design. First and foremost, while selecting shelves, we must take into account the location of medicine stores and select more appropriate styles and materials. Second, while choosing a colour, it should coordinate with the rest of the drugstore's decor. Finally, when it comes to pharmacy shelf layout design, we may enlist the help of professionals who can advise us and make more practical shelf placement recommendations.  Interior Layout of a Warehouse Shelves and pallets: Shelves that are solid and sturdy are essential. Metal constructions are preferred in tropical climates where termites destroy wood. It is simple to change spacing between shelves and lanes to better allow things to be stored because they can be uninstalled. Ventilation is improved by leaving space between shelves and walls. Stocking areas: Within a community pharmacy, stocking areas should be provided. Receiving and distribution areas: These areas should be near the door in order to facilitate handling. It is also recommended to plan a stocking area for empty boxes, used to prepare orders for peripheral health facilities. Workspace(s): A workspace should be set up in the receiving area and in the distribution area to verify deliveries and prepare orders. Desk: For the person in charge of the pharmacy, a desk near a light source should be set up for administrative work and for keeping documents.  Vendor Selection and Ordering In the purchasing activity of manufacturing and trading firms, vendor selection and order quantity assignment are essential. The following are some of the variables to consider while choosing a vendor: 1. Quality 2. Price 3.Quick Delivery 4.Service 5. Assurance of supply 6.Size of the supplier 7.Number of suppliers 8.Local suppliers and 9.Miscellaneous Considerations. 1. Quality: The term "quality" refers to a supplier's capacity and willingness to meet the buyer's requirements. Quality should never be traded for a low price. 2. Price: Normally, quality and price do not necessarily correlate, but we must look for suppliers who can provide a better-than-average product at an average price. Low-cost purchases should not be undertaken at the expense of bad quality. 3. Quick Delivery: The lead time i.e., time to get supplies, should be less so that there is a quick delivery of goods. Generally, the best suppliers are the busiest and in order to get goods from them, one has to wait for a long time. However, quick delivery reduces the amount of forward planning and increases the flexibility. 4. Service: It is a crucial concern while choosing a vendor. It entails giving the buyer expert advise both before and after the purchase of materials and other things. Good customer service aids in the maintenance of positive relationships between the supplier and the buyer. 5. Assurance of supply: Only those suppliers should be preferred who assure supplies of raw materials and other components. Thus, suppliers who suffer recurring shortages should be used with great care as it can adversely affect our production schedule. 6. Size of the supplier. Some authorities recommended that orders of small size should be placed with a small company whereas the orders of large size should go to large companies. However, this correlation can't be always applied. A small supplier would generally work very hard to perform a large order, if given a chance. 7. Number of suppliers: Minimum supplier has the following advantages, (a) In times of shortage, the supplier will give preference to the needs of the customer. (b) A single supplier can also offer the best price with assured supplies. On the other hand two or more suppliers may be beneficial in times of shortage. Large companies generally buy from two or more suppliers getting the twin benefit of low price and service. 8. Local suppliers: Sometimes, a buyer may be compelled to buy certain requirements locally on account of the following reasons a) Community relations between the company and public may force the buyer to buy locally. For example, the supplier to a hospital or charitable trust by the local businessman would help in raising the funds for such organisations. b) Local buying is generally justified when small quantities of materials are purchased. c) There is a feeling of closer co-operation between the vendor and the buyer. d) The delivery is quickly made. e) Urgent orders can be met promptly. f) Disputes, if any, can be easily resolved. 9. Miscellaneous Considerations: The following points should also be taken into account at the time of selection of suppliers: (a) In order to maintain complete objectivity, the buyer must keep himself free from unethical influences. Favour to friends should be avoided. Similarly commercial bribery such as gifts etc has no place in selecting vendors. (b) Dishonest vendors must be rejected forever.  Ordering Procedure 7) Matching of 1) 6) Receiving Documents in Identification and Checking Three of need the Material Directions 5) Negotiation 8) Approval 2) Purchase and Approval and Payment requisition of Contracts of Invoices 3) Review and 9) Recording Approval of 4) Requests of Bills in Purchase for Proposal Accounting Orders (POs) Books 1) Identification of need: The Company recognizes and documents a demand for goods or services to remedy a specific problem at this stage. The procurement team defines the requirement to be met and collaborates with others to figure out the best way to meet it. 2) Purchase requisition: The individual, team, or department requesting the products or services initiates the "buying" element of the purchasing process by submitting a purchase requisition to the purchasing department or purchasing manager. The purchase requisition comprises all of the information needed to procure the commodities or services. Purchase requisitions that have been rejected are returned to the issuing party for examination and, if necessary, modification or clarification. 3) Review and Approval of Purchase Orders (POs): Purchase orders that have been approved are sent to accounting to ensure that funds are available in the proper budget to cover the required products and services. 4) Requests for Proposal: POs that have been approved by the administration are returned to the purchase department and, if necessary, used to prepare requests for proposal (RFPs), also known as requests for quotation (RFQs). These are sent to vendors in order to get quotations to fulfill the order for goods or services. Potential suppliers submit bids, which are carefully evaluated based on their previous performance, compliance records, and important characteristics including average lead times, reputation, and price. 5) Negotiation and Approval of Contracts: The winning bidder is then given a contract, which is fine-tuned before being signed to guarantee optimal terms and conditions and a mutually satisfying arrangement for both sides. The purchase order is a legally binding agreement between the buyer and the seller once the contract is signed. 6) Receiving and Checking the Material: Within the agreed-upon timescale, the supplier provides the goods or services. The purchaser carefully evaluates the items and services after they've been received (in the case of goods) or performed (in the case of services) to confirm they've received what was promised, and notifies the vendor of any difficulties. 7) Matching of Documents in Three Directions: The comparison of shipping documents/packing slips with the original purchase order and the invoice given by the supplier is a cornerstone of expenditure management. This comparison is performed to confirm that all transaction-related information is correct. To avoid additional charges, production and payment delays, or damage to supplier relationships, discrepancies must be resolved as quickly and smoothly as possible. 8) Approval and Payment of Invoices: Payment is approved for orders that have been successfully matched. Any changes or additional costs may require a second round of approvals before payment is made. Payment is made to the seller once it has been approved. Such payments should ideally be made in order to take advantage of early payment discounts and other incentives while avoiding late payment fees. 9) Recording of Bills in Accounting Books: The bills are then forwarded to the accounts department, where they are recorded into the books of accounting. Damaged material, excessive material, short supply, and material of inferior quality, if any, are all reported to the concerned authority for further action.  Procurement Procurement: It is the process of identifying, shortlisting, selecting, and purchasing relevant goods, services, or works from a third-party vendor via direct purchase, competitive bidding, or tendering while guaranteeing timely delivery of the right quality and quantity. Purchasing: It is the specific function associated with the actual buying of goods and services from suppliers. Sourcing: It is simply identifying and working with appropriate suppliers. It is the process of acquiring goods, works and services.  Steps Involved in Procurement Process Step 0: Step 1: Step 2: Step 3: Needs Purchase Requisition Solicitation Recognition Requisition Review Process Step 6: Step 7: Step 5: Step 4: Invoice Evaluation & Record Order approvals & Contract Keeping Management Disputes Step 0: Needs Recognition: The needs recognition stage of a procurement process enables businesses to sketch out an accurate plan for procuring goods and services in a timely manner and at a reasonable cost. Step 1: Purchase Requisition: Purchase requisition are written or electronic documents raised by internal users/customers seeking the procurement team's help to fulfill an existing need. It comprises key information that is required to procure the right goods, services, or works. Step 2: Requisition review: The procurement process will officially commence only after the purchase requisition is approved and cross-check for budget availability. In the review stage, functional managers or department heads review the requisition package and double-check if there is a genuine need for the requested goods or service and also verify whether necessary funding is available. Approved purchase requests become POs, while rejected requests are sent back to the requisitioner with the reason for rejection. All these can be handled with a simple purchase order software. Step 3: Solicitation process: Once a requisition is approved and PO is generated, the procurement team will develop an individual procurement plan and sketch out a corresponding solicitation process. The scope of this individual solicitation plan depends ultimately on the complexity of the requirement. Once the budget is approved, the procurement team forwards several requests for quotation (RFQ) to vendors with the intention to receive and compare bids to shortlist the perfect vendor. Step 4: Evaluation and contract: Once the solicitation process is officially closed, the procurement team in conjunction with the evaluation committee will review and evaluate supplier quotations to determine which supplier will be the best fit to fulfill the existing need. Once a vendor is selected, the contract negotiation and signing are completed, and the purchase order is then forwarded to the vendor. A legally binding contract activates right after a vendor accepts a PO and acknowledges it.  Step 5: Order management: The vendor delivers the promised goods/services within the stipulated timeline. After receiving them, the purchaser examines the order and notifies the vendor of any issues with the received items. Step 6: Invoice approvals and disputes: This is a crucial step in the procurement process having procurement software like Kissflow Procurement Cloud gives a competitive edge over others. With Kissflow, one can perform three-way matching between GRN, Supplier Invoice and PO to check if you have received the order correctly and there aren't any discrepancies. Once three-way matching is complete, the invoice is approved and forwarded to payment processing. Step 7: Record Keeping: After the payment process, buyers make a record of it for bookkeeping and auditing. All appropriate documents right from purchase requests to approved invoices are stored in a centralized location. Strategies For Good Procurement Quality Mode of Transpor Quantity tation Right Price Source Time Place 1. Right Quality: Appropriate Quality: The supplier's goods and services must meet general and specific standards, be fit for purpose, and meet the needs of the customers. For example, in order to get good value for money, the customer requires high-quality goods. To avoid the following concerns, a supplier must supply the appropriate quality of goods: Goods will be rejected and returned back to the supplier. It may lead to production stoppage of a manufacturing firm. Finished products will be defective and they will have to be scrapped or re-worked. Defective products may reach customers, resulting in goods returns, compensation claims, lost goodwill, damaged reputation among other implications. 2. Right Quantity: A supplier should deliver goods and services in the right quantity as ordered by the customer (buyer). It enables the customer to meet business demand and achieve service levels due to sufficient supply which should not be more or less. A supplier has to deliver the right quantity of goods according to the order given by the supplier to prevent the following: Over-stocking or under-stocking of inventory. Stock-outs will cause bottlenecks or production shutdowns. Extra operating costs in equipment maintenance. Production idle time. Late delivery of goods to customers leading to credibility loss, goodwill and sales. Ordering for more goods due to less stock leading to additional transaction costs. Returning excess stock to the supplier leading to additional logistics costs among other issues 3. Right Source (Supplier): A customer (buyer) should be able to purchase goods and service from a preferred supplier who is competent able to offer the highest level of customer service. A reliable supplier should be able to offer the following: Best Cost i.e. better pricing. Quality supplies and continuous product or service improvement. Flexibility in demand i.e. rapid response to changes in order levels. Excellent service delivery through cooperation in contract agreements. Favourable payment terms among other criteria. 4. Right Place: A supplier should deliver goods and services to the right customer (buyer) at the right location of delivery. Goods and services delivered to the wrong customer will lead to the following: Operations delays in production. Resources wastage in terms money, time, labour etc. Extra logistics costs e.g. transport, handling, insurance etc. Damaged, contaminated or stolen in good while in transit. Delayed payments among other implications. 5. Right Time: A supplier should be able to accurately schedule delivery of good and services to the customer (buyer) at the right time. Good or services should not arrive early to customer causing rise to inventory holding costs, security, damage etc. They should not arrive late which will cause production bottlenecks, manufacturing delays, lost business due to delayed customer orders. 6. Right Price: The customer (buyer) should be able to negotiate a fairly reasonable price from a supplier at fair, competitive and affordable cost of acquiring the goods or services to save money while maximizing value to make profits in the business. The customer should make the best purchasing decision reaching a mutual agreement with the supplier through negotiation i.e. discussions, bargaining, critical bid or proposal analysis in order to make the most valuable procurement. 7. Right Mode of Transportation: The goods may be supplied by road, rail or air. The mode of transportation is to be decided between the supplier and purchaser.  Methods of Procurement 1. Direct purchase from the manufacturer or their regional centres 2. Direct purchase from wholesalers and stockists 3. Purchase from rack jobbers 4. Purchase through bids 5. Purchase through competitive negotiation 6. Purchase through a contract 7. Local purchase 1. Direct purchase from the manufacturer or their regional centres: Direct purchase from manufacturers is the simplest mode of purchase, and it is also the most cost-effective and secure. However, the quality, packaging, and other aspects of the identical items from different producers may differ. 2. Direct purchase from wholesalers and stockists: In India, wholesalers supply around 90% of the items offered in retail through community pharmacies. The wholesaler predicted the market's need for pharmaceutical items, procured them, and made them available at the appropriate moment. Wholesalers ensure prompt delivery of orders and, in general, offer credit to retailers in order to satisfy and attract them. 3. Purchase from Rack jobbers: Rack jobbers are a type of wholesaler who specialises in a small number of pharmacy items. The rack jobbers work with the pharmacy manager to supply and maintain a certain selection of commodities in a pharmacy fixture or rack. 4. Purchase through bids: A bid or tender is an offer (at a given price) to supply certain specified or listed things for a specific quantity or cost, subject to certain terms and circumstances. It is accomplished by open tendering, limited tender or quotation invitation. 5. Purchase through competitive negotiation: In a competitive negotiation, the buyer asks a small number of providers for price quotes, usually not less than three and not more than ten. Local, national, or international parties may be involved. Buyers can negotiate with these vendors after receiving their quotations in order to get a specific pricing or service arrangement. 6. Purchase through a contract: In this case, the things are purchased through a contract with the manufacturer or their agent. On a contract basis, prices for the acquisition of medicines, hospital supplies, and other goods items required by hospitals or institutions might be set. There are several sorts of contracts that can be used, including fixed quantity contract, running contract or rate contract. 7. Local purchase: A local purchase (LP), sometimes known as an emergency purchase (EP), is undertaken in response to a crisis. The LP is acquired from local retailer/wholesaler/ manufacturer at their price.  Methods of Inventory Control The following are different techniques commonly used to control the inventory :- 1. ABC analysis. 2. Economic order quantity. 3. Perpetual inventory system 4. Review of slow and non-moving items. 5. Input-output ratio analysis 6. Setting of various levels. 7. Use of material budgeting 8. Establishing an effective purchase procedure.  1] ABC ANALYSIS In big drug stores, large inventory items are stocked. In order to maintain a proper control of inventories, the ABC (Always Better Control) technique is used. In this technique, the materials are divided into three groups A, B and C according to the cost of the materials and money value of consumption.  A Items B Items C Items 1. It covers 10% of the total It covers 20% of the total It covers 70% of the total inventories. inventories. inventories. 2. It consumes about 70% of It consumes 20% of total It consumes 10% of the total total budget. budget. expenditure of inventories. 3. It requires very strict control. It requires moderate control. It may require loose control. 4. It needs maximum follow up. It needs periodic follow up. It needs close follows up. 5. It must be handled by senior It can be handled by middle It can be handled by any officers. management. official of the management. 6. It requires either no safety It requires low safety stocks. It requires high safety stocks or low safety stock. stocks.  Advantages of ABC Analysis : The main advantages of ABC analysis are as under :- 1. The investment in inventory can be regulated and funds can be utilized in the best possible manner. 2. There is a closer and strict control on those items which represent a major portion of total stock value. 3. It helps in maintaining enough safety stock of C categories of items. 4. The scientific and selective control helps in the maintenance of high stock turnover rate. 5. It reduces the inventory carrying cost.  = VED ANALYSIS = This system is based on the utility of the material. In a drug store, VED analysis is very useful in controlling and maintaining the stock of various types of formulations of a particular group of drugs. The older the brand, the greater will be its requirement. The past trends are not useful in calculating the requirements of a particular brand. The best way to solve this problem is to classify the different brands of drug formulation into any one of the following categories : V = Vital items E = Essential items D = Desirable items For example, acetyl salicylic acid is available as disprin tablets, anacin tablets, micropyrine tablets. There is a great demand of disprin tablets, so these are classified as vital items, followed by micropyrine tablets which are cove red under essential items due to its less demand than disprin tablets. Anacin tablets may be considered as desirable items because there are hardly a few prescriptions of it. In a drug store, there should be maximum stock of disprin tablets, followed by micropyrine tablets and then of anacin tablets.  = SETTING OF VARIOUS LEVELS = In order to maintain inventory control, it is important to decide upon various levels of materials. 1] These are maximum level, 2] Minimum level and 3] Re-order level. These levels are not permanent, but need revision due to changes in the factors which determine these levels. Maximum stock level : Maximum stock level represents the upper limit beyond which the quantity of any item is not normally allowed to rise. The maximum stock level for a particular item is fixed after considering the following points :- 1. Rate of consumption of material. 2. Storage space available. 3. Amount of capital needed and available 4. Nature of material 5. Market trend 6. Fashion habits 7. Government restrictions. 8. Risk involved due to fire, obsolescence and deterioration 9. Lead time from the date of placing the order.  The formula for computing maximum level is as follows :- Maximum = Re-order + Re-order – Minimum level level Quantity consumptio n Minimum = Minimum x Minimum consumpti consumption per re-order period on week Minimum stock level or safety stock : This is the lower limit below which the stock of any item should not normally be allowed to fall. This is also known as buffer stock. The main purpose of determining this limit is to protect against the possibility of a particular item going out of stock and there is further danger of stoppage of its production and supplies.  This level is fixed taking into consideration following factors :- (1) Average rate of consumption (2) Lead time Lead time is the total time consumed between the recognition of the need of an item, till the time it is received for use.  The minimum stock level is expressed as follows : = Re- – Normal x Average Minimu order consumption delivery m level per week Time level or Normal re-order period Re-order level : Re-order level is fixed between the minimum and maximum stock levels. When stock of an inventory, reaches at this point, the process for the purchase of material should be started. The re-order level is slightly more than minimum stock level to guard against. (1) Abnormal use of item (2) Abnormal delay in supply The formula for calculating the re-order level is : Reorder = Minimum x Maximum level consumption re-order during the period period Danger level : This is generally below the minimum stock level. Normal stock level should never be allowed to fall below the minimum level. If it reaches the danger level at any point of time, urgent action must be taken to prevent stock out. Danger level can be calculated with the help of following formula. Danger level = Average rate of consumption x Emergency supply time ECONOMIC ORDER QUANTITY (EOQ) This techniques is used to find out how much of the inventory is to be ordered. The correct quantity to buy is the quantity at which the ordering cost and the inventory carrying cost will be the minimum. The ordering cost consists of the cost of paper-work involved in placing an order, like use of paper, typing, posting, filing etc. It also includes the cost of the salaries of staff involved in this work, the costs incidental to placing an order like follow-up, receiving, inspection.  The ordering cost is more or less fixed. The inventory carrying cost is represented by items like rent of storage, cost of insurance and taxes, salaries of storekeeper and losses in stores due to pilferage, wastage, breakage etc. Methods for Determination of Economic Order Quantity :- The following methods are generally used for determination of economic order quantity :- 1. Tabular determination of EOQ. 2. Graphic presentation of EOQ. 3. Determination of EOQ by an algebraic formula. 1. Tabular determination of EOQ : A tabular arrangement of data relating to items of materials helps in the determination of an approximate EOQ. This arrangement may help the company to find out the number of orders that need to be placed weekly, quarterly, monthly or yearly. The following Table helps to determine EOQ.  For example, the order cost is Rs 10 per order. Inventory carrying cost is 10% of the rupee value of annual usage. Rupee value of the annual usage is Rs 1000. Suppose the item was ordered once in every month, the order cost per year would be Rs 120.00. Similarly, if items were purchased once every two months, i.e. 6 times in a year. The cost of ordering for the year would be Rs 60.00 (Rs 10 x 6 = 60). In this manner the annual ordering cost can be calculated for other frequencies.  The annual inventories carrying cost is then calculated by the following method :- The items which were purchased once every month, the annual inventory carrying cost will be (10/100 x 1000/12 = Rs 08.33). Similarly the inventory carrying cost for other frequencies can be calculated. The total annual cost of purchasing the items at different order frequencies per year can be calculated by adding the ordering cost and inventory carrying cost.  Number of Annual Annual Total Annual Orders Per Ordering Cost Inventory Cost Year Carrying Cost (1) (2) (3) (2 + 3) 1. 12 120 8.33 128.33 2. 6 60 16.55 76.66 3. 4 40 25.00 65.00 4. 3 30 33.33 63.33 5. 2 20 50.00 70.00 6. 1 10 100.00 110.00  From above table , it is observed that the total annual costs for purchasing the items are lowest when it is bought three times per year. The total annual cost at this frequency is Rs 63.33 per year. 2] Graphic presentation of EOQ : Economic order quantity can also be determined graphically. If a graph is plotted between order quantity and cost to order and carry, the ideal order size is the point where the sum of both the costs Is the minimum. The point occurs at A, where line representing annual carrying cost intersects the line representing the ordering cost. 3] Determination of EOQ by algebraic formula : EOQ can also be computed by using the following formula :- 2 ab EOQ = cs where a = Annual consumption b = Buying cost per order c = Cost per unit of material s = Storage and other inventory carrying cost. For example, annual usage of a material is 1200 units and it cost Rs 10 to handle an order for this material. The price is Rs 1.00 per unit regardless of the quantity purchased and carrying cost of inventory is 24% per year. Then – 2 x 1200 x 10 EOQ = 1.00 x 0.24 = 316 units  = REVIEW OF SLOW AND NON-MOVING ITEMS = Inventory is an important constituent of total cost and as such a proper system of inventory control leads to a significant economy in the total cost of production. So proper system must be enforced to detect and control slow moving items, obsolete items and dormant stock. Slow moving materials are those items which are moving at a slow rate. Dormant materials are those items which are moving temporarily because of seasonal production. Obsolete items are those which have become useless due to change in design, method of manufacture, product or process etc. The slow moving items are to be value at cost, replacement price or net realizable value, whichever is less.  In order to detect slow and non-moving items, the following steps may be taken :- 1. Periodic report. 2. Obsolete items 3. Moving ratios Periodic report : A monthly or quarterly report on the stocks of non-moving items is prepared which indicates its purchase, consumption and balance in hand. These reports are given to the management. Obsolete items : Many of the slow and non-moving items may become useless with the passage of time. A well designed information system has to be devised to locate such obsolete items, so that these can be utilized and their further purchase can be stopped. Moving ratios : In order to isolate slow moving items, document and dead stocks, moving ratios may be calculated periodically. These ratios show the turnover of these items for presentation to the management. PERPETUAL INVENTORY SYSTEM The perpetual inventory systems comprises :- 1. Bin card 2. Stores ledger 3. Continuous stock-taking Bin card : This is a document maintained by the store-keeper in his store to keep record of all items of materials and goods in his store. So bin card serves the purpose of providing ready references. It shows quantities of each material received, issued and in stock.  Deepak Pharmaceutical Pvt. Ltd. BIN CARD Description of Material : Bin No. : Code No. : Normal quantity to order : Stores ledger folio No. : Maximum stock level : Re-order stock level : Date Receipt Issue Balance quantity G.R. No. Quantity S.R. No. Quantity Store ledger : It is kept in the cost accounting department. The stores ledger is generally maintained in the form of loose leaf cards because they can be easily removed and inserted. Deepak Pharmaceutical Pvt. Ltd. STORES LEDGER ACCOUNT Description of Material : Maximum stock : Code No. : Minimum stock : Bin No. : Re-order level : Location : Ordering quantity : Unit : Date Receipts Issue Balance Stock Verified G.R. No. Qty. Rate Amt. S.R. No. Qty. Rate Amt. Qty. Rate Amt. Date Ini- tial Rem- arks Continuous stock-taking : Under this system only a limited number of items are verified on a day. The selection of the items of materials should be such that each item of material gets checked up at least a certain number of times in a year and the checking of a particular item is evenly distributed during the period. The selected number of items are counted daily or at frequent intervals and compared with the bin card and stores ledger by the store-keeper. Advantages of Perpetual Inventory System : 1. It helps in detection and immediate rectification of clerical errors / discrepancies. 2. It ensures a reliable checking of the store items in a methodical manner without disturbing the routine work of the enterprise. 3. Timely action can be taken on serious shortages. 4. It serves as a moral check on the staff, thus serving as a deterrent to dishonesty. 5. Overstocking and understoking is avoid because perpetual inventory system covers verification of stock with regard to maximum and minimum stock level. 6. It helps in the compilation of Profit and Loss Account and Balance sheet on interim dates if so required.  Inventory Management Inventory refers to the stock of products held to meet future demand. Pharmacies hold inventory to guard against fluctuations in demand, to take advantage of bulk discounts, and to withstand fluctuations in supply. There are four costs associated with having inventory: acquisition costs, procurement costs, carrying costs, and stock-out costs  Inventory Management The acquisition cost is the price the pharmacy pays for the product. Procurement costs are the costs associated with purchasing the product: checking inventory, placing orders, receiving orders, stocking the product, and paying the invoices. Carrying costs refer to the storage, handling, insurance, cost of capital to finance the inventory, and opportunity costs. Another carrying cost is the cost of loss through theft, deterioration, and damage. Procurement and carrying costs must be balanced. For example, increasing the average order size and decreasing the number of orders placed decrease procurement costs but increase carrying costs. The fourth cost is the stock-out cost, which is the cost of not having a product on the shelf when a patient needs or wants it.  Factors to Consider In Inventory Management Selection of generic products Reduction of inventory size Returned-goods policies Monitoring shrinkage Use of formularies Selection of generic products: Generic drug products usually have a lower acquisition cost, and therefore, by stocking generic products, the amount of money invested in inventory is reduced. For example, a pharmacist may decide not to stock brand-name Lasix because generic furosemide is less expensive, thereby reducing the amount of money invested in inventory. Reduction of inventory size: A pharmacist may decide to have a small front end in his or her store to reduce the amount invested in inventory. He or she may carry only basic product lines (i.e., a smaller numbers of brands and items) as opposed to full product lines (i.e., every brand and every item). Returned-goods policies: One critical component is the evaluation of returned-goods policies. Many manufacturers and wholesalers have established policies regarding merchandise that be returned. In exchange for returning unsalable goods, these vendors may provide credit on future purchases, replacement goods, or even cash back to the pharmacy. Pharmacy managers should monitor products closely that qualify for the various returned-goods policies, making certain that such returns are made on a regular, periodic basis before time limitations take effect. Monitoring shrinkage: Inventory shrinkage includes losses owing to shoplifting, employee theft, and robbery. The largest source of shrinkage for most retailers is employee theft. It is important to recruit honest personnel and monitor their activities, especially those working in the prescription area of a pharmacy, because theft of controlled substances in pharmacies is increasingly problematic. Equally important to install security mirrors and cameras. Some pharmacies use technologies such as inventory-control bars to prevent loss of product from theft. Use of formularies: The institutional pharmacies commonly use formularies to facilitate inventory management. A formulary allows the pharmacy manager to carry one therapeutic equivalent within a class of drugs instead of each drug product within the class. This allows pharmacy managers to lower their overall investment in inventory. Accounting may be defined as the process of identifying, measuring, recording and communicating the economic events of an organization to the interested users of the information. Accounting information is also important for them who have indirect financial interest, such as, tax authorities, labour unions, trade associations, stock exchanges and customers etc. Objective of Accounting : 1. Maintain proper records of business : This is done by recording all business transactions in a ledger regularly with a view to preparing necessary financial statements as and when required. 2. Calculation of profit and loss : This information is available from the Profit and Loss statement. 3. Depiction of financial position : A Balance Sheet depicts the financial position of an enterprise. 4. To know the exact reasons leading to net profit or net loss. 5. To prevent errors and frauds. 6. To ascertain the progress of business from year to year. 7. Availability of information to various users : There are two types of users which need information : (a)Internal users : (b) External users : (a)Internal users : The officers and staff of an enterprise need useful and timely information for making various business decisions. The information required by internal users are :- (i) Net profit earned by the company in last accounting period. (ii) Whether the company has enough cash in hand to make payment to debtors. (iii) The products which are more profitable. (iv) The products which are not making profit or having less demand in the market. (vi) The cost of manufacturing of each product. (vii) The capital/money required to expand the business. (b) External users : The investors, creditors, tax authorities, labour unions, trade associations, stock exchanges and customers fall in this category. They are not in a position to get direct information about the financial state of the business concern. They have therefore to rely on financial statements (such as Balance Sheet, Profit and Loss Statement etc.) The external users are mostly interested in the following information :- (i) The assets and liabilities of the business enterprise to evaluate its financial position. (ii) The amount and the time of payment of dividend/interest to share holders and investors. (iii) The performance and the earning capacity of the business enterprise. 8. To comply legal requirements : - In case of companies, auditing is compulsory. - Auditing is not possible without accounting. - So accounting should be done in such a way that it complies with legal requirements. - The income-tax returns and financial statements which are required to be filed by various institutions, are made from accounting information.  1.Financial accounting Branches of Accounting 3.Management 2.Cost accounting. accounting 1. Financial accounting : It is mainly concerned with record- keeping directed towards the preparation of Profit and Loss Account and Balance-Sheet. The main purpose of financial accounting is :- (a) To prepare the necessary accounts and balance-sheet. (b) To record the transactions which concern or effect the business. (c) To apprise the owners of the business about the financial state of the business. 2. Cost accounting : - It is the process of accounting for costs. - It is a systematic procedure for determining the unit cost of output produced or services rendered. - The main function of cost accounting is to find out the cost of product and to help the management in controlling its cost. 3. Management accounting : - It is primarily concerned with the supply of information which is useful to the management in making decisions for smooth and efficient running of its business. - Another important function of management accounting is to enable the business to earn maximum profit by effective management of finance. 4. Tax accounting : - The branch of accounting which is used for tax purpose is known as tax accounting. - Income tax and sales tax are computed on the basis of this accounting. 5. Social responsibility accounting : - It is the process of identifying, measuring and communicating the contribution of a business to the society, - which consists of providing employment to under privileged, providing financial and manpower support for public programmes, products safety, product durability, customer satisfaction etc. Limitation of Accounting :- 1. The scope of accounting is restricted to the limits laid down by various laws. 2. The transactions which cannot be expressed in terms of money are not recorded in accounting. 3. In accounting cost concept is followed. The changing prices are not taken into account. 4. Convention of materiality is followed in accounting. Hence, all material items must be disclosed in financial statements. The immaterial information is not recorded in financial accounting. 5. The accounting policies are framed by the accountants according to their own individual judgements. It is a subjective factor. The objective factor is completely ignored. 6. In accounting, provision is made on the concept of conservation for prospective losses like bad and doubtful debts but no provision is made for prospective profits. DAY BOOKS - In big firms, there are large number of transactions of similar type. - In order to maintain a proper record of all such transactions, the firm maintains special journals for this purpose known as 'day books’. - The following day books are commonly used :- 1. Purchases journal. 2. Sales journal. 3. Purchases return journal 4. Sales return journal. 1. Purchases journal : - It is also called 'Invoice book' and is used for recording purchase of goods on credit. The cash purchases are not recorded in it. Instead of that cash purchases are recorded in the cash-book. - Other purchases such as purchase of office equipment, furniture, building (i.e. assets) are recorded in general journal if purchased on credit or in cash book if purchased for cash. - The entries into purchases journal are recorded from the invoices or bills received from the suppliers of the goods. The trade discount and other details are not recorded in the purchases journal. - The transactions which are properly recorded in purchases journal are then posted to the ledger. The posting to the individual supplier account may be done daily on the credit side of their accounts. The monthly total of the purchases book is posted to the debit side of purchases account in the ledger.  Purchase Journal Date Invoic Name of the L.F. Amount 2015 e No. supplier Rs. May 1 5214 Glaxo Lab 8 12,600.00 4 0124 Ranbaxy 6 16,500.00 6 3144 IDPL 12 17,400.00 14 570 Searl 51 4,200.00 24 1208 Eastern Pharma 40 8,400.00 30 3215 Park Davis 34 6,400.00 65,500.00 2. Sales journal : - It is also called day book and is used for recording sale of goods on credit. - Cash sales are recorded in the cash-book. - If an asset is sold on credit it is recorded in the general journal. - The entries into sales journal are recorded from the sales invoices or bills issued by the firm to the customers. - The transactions recorded in the sales journal are then posted to the ledger. - The posting to the individual customer's accounts may be made daily on the debit side of their accounts. - The monthly total of the sales journal is posted to the credit side of sales account :-  Sales Journal Date Invoice Name of the L.F. Amount 2015 No. customer Rs. May 2 0216 Din Dayal, Rohtak 35 2,700.00 8 0217 Shyam Lal, Ropar. 80 7,460.00 14 0218 Hari Ram, Lucknow. 41 8,100.00 20 0219 Ram Gopal, Delhi 32 3,400.00 31 0220 R. K. Goyal, Hissar. 12 6,200.00 27,850.00 3. Purchases returns journal : - This journal is used for recording transactions relating to return of goods purchased on credit. - When the goods purchased are returned to the supplier for any reason, a debit note is prepared in duplicate. - The original one is sent to the supplier for making necessary entries in his books and the duplicate copy is kept for official record. - A debit note contains the name of the party to whom the goods have been returned, details of the goods returned and reason for returning the goods. - Each debit note is numbered serially and dated. - The individual amounts are posted immediately by making a debit entry in the party's account. - The monthly total of the purchases returns journal is credited to the purchases return accounts. Date Debit Name of the supplier L.F. Amount 2015 note No. Rs. May 12 21 S. K. Goyal, Delhi 4,900.00 20 22 Ess Kay Pharma, 7,200.00 Kanpur 27 23 Garrot Pharma, Delhi 8,100.00 20,200.00 4. Sales return journal : - This journal is used for recording transactions relating to return of goods which were sold by the firm to customers on credit. - On receipt of goods from the customer, a credit note is prepared in duplicate. - The credit note contains details relating to the name of the customer, details of goods received back and the amount. - Each credit note is serially numbered and dated. - The individual amounts are posted immediately by making an entry on the credit side of the party's account and the monthly total of the sales returns journal is debited to sales returns account. - The format and preparation of the sales returns journal is illustrated below  Sales Return Journal Date Credit Name of the L.F. Amount 2015 note No. customer Rs. May 18 8 Din Dayal, Panipat 6,400.00 24 9 Ram Gopal, Karnal 8,050.00 9 10 R. K. Bajaj, Delhi 6,200.00 20,650.00 CASH BOOK - Cash book is used to keep a record of all transactions related to cash receipts and cash payments. - This serves the purpose of both journal as well as ledger account. - Cash book is also a book of original entry, because the transactions are recorded from the source documents for the first time. - When a cash book is maintained, transactions of cash are not recorded in the journal. - In big organisations such as banks, there are separate cash books for cash receipts and cash payments. Types of Cash Books : There are three types of cash books :- 1. Single column cash book or simple cash book\ 2. Two columnar cash book 3. Three columnar cash book 4. Petty cash book 1. Single column cash book : - A cash book which contains only one column of amount is called a single column or simple cash book. - A cash account is divided into two sections by central vertical line. - The debit entries are made on left hand side and credit entries are made on right hand side. - The abbreviation 'Dr' and 'Cr' are written at the top left and right hand corner respectively. - The word 'To' is written before debit entries and word 'By' is written before credit entries. - The format and entries in a single column cash book are illustrated below.  Illustration (4) Make the entries of following transactions in the single column cash-book of M/s Ganpati Medical Hall and balance it. 2015 Rs. April 1 Balance in hand 8,400 2 Paid to Ms All Well Chemist 6,400 4 Received from M/s Ravi Medical Hall 3,500 9 Received on account of cash sale 4,200.00 10 Paid to M/s Jyoti Electricals 1,800 14 Received commission from M/s Nath & Co 3,200 15 Paid to M/s Goyal Bros. for advertisement 850.00 16 Paid for stationery 745.00 17 Received from cash sale 4,500.00 19 Drawn for personal use 6,200.00 21 Paid to Mr Rakesh 6,400.00 23 Received from Mr Dinesh 4,200.00 26 Purchased goods for cash 1,980.00 27 Remitted to M/s Jyoti Bros 1,650.00 28 Received from Mr. Gurav 3,200.00 30 Paid salaries to staff for the month of March 6,800.00 30 Paid rent of the shop 2,100 Date Particulars L.F. Amount Date Particulars L.F. Amount 2015 2015 April 1 To Balance b/d 8400.00 April 2 By M/s All Well Chemist 6400.00 4 To M/s Ravi Medical 3500.00 10 By M/s Jyoti Electricals 1800.00 Hall 9 To Sale A/c 4200.00 15 By Advt. A/c 850.00 14 To Commission 3200.00 16 By Stat. A/c. 745.00 17 To Sale A/c 4500.00 19 By Drawing a/c 4200.00 21 By Rakesh 3400.00 23 To Mr Dinesh 6200.00 26 By Purchase 1980.00 28 To Mr Gurav 3200.00 27 By M/s Jyoti Bros 1650.00 30 By Salaries a/c 6800.00 30 By Rent 2100.00 30 By Balance c/d 3275.00 33200.00 33200.00 May 1 To Balance b/d 3275 Solution where c/d = carried down; b/d = brought down. 2. Two columnar cash book : - There is great importance of discount in cash transactions. - If a businessman receives or allows cash discount, then two columnar cash-book is needed to record it. - In this type of cash book, the following two columns are provided on each side of the cash book :- (a) The first column is for discount, which is a nominal account. (b) The second column is for cash, which is a real account. - Each item of discount allowed is recorded to the credit side of the concerned personal account while each item of discount received is posted to the debit of respective personal accounts. - The total of the discount columns on each side are done without balancing. - The total of the discount column on the debit side is debited to the Discount Account and the total of the discount column on the credit side is credited to the Discount Account. - The cash columns are recorded in the same way as in the simple cash book. - The balance of the cash column is ascertained in the same manner as the balancing of simple cash book.  Enter the following transactions in the two columnar cash book of M/s Swastik Medical Hall and balance it. 2015 Rs. March 1 Cash in hand 15,000.00 4 Paid to Suraj 4,500.00 Discount allowed 90.00 8 Cash purchases 2,700.00 12 Received payment from M/s Janta Medical Hall 45,000.00 Discount allowed 150.00 16 Cash sales 575.00 22 Paid to M/s All Well Chemist 2,795.00 Discount allowed 60.00 28 Paid wages 5,200.00 30 Paid salaries 40,000.00 31 Paid rent 8,000.00  Two columnar Cash Book of M.s Bhutani Medical Hall ‘Dr’ Receipts Payments ‘Cr’ Date Particulars L.F. Discount Cash Date Particulars L.F. Discount Cash 2015 Rs. Rs. 2015 Rs. Rs. March 1 To Balance b/d 15,000.00 March 4 By Suraj 90.00 4,500.00 8 By Purchases 2,700.00 12 To M/s Janta 150.00 4,500.00 Medical Hall 16 To Sale 5,475.00 2 By M/s All Well 60.00 2,795.00 2 Chemist 2 By Wages 5,200.00 8 3 By Salaries 40,000.0 0 0 3 By Rent 8,000.00 1 3 By Balance c/d 2,280.00 1 150.00 65,475.00 150.00 65,475.0 0 April 1 To Balance b/d 2,280.00 3. Three columnar cash book : - It is a popular form of cash book. - In this type of cash book, the following three columns are provided on each side of the cash book. (a) The first column is for discount, which is a nominal account. (b) The second column is for cash, which is a real account. (c) The third column is for bank, which is a personal account. The following, procedure is adopted while posting a transaction in the three columnar cash-book:- 1. When amount is received in cash, it is recorded in the debit side in the cash column and the discount allowed to the party concerned in this connection is recorded in the discount column of debit side. 2. All cash payments are to be recorded in the credit side in the , cash column and the discount received from the party concerned in this respect shall be recorded in the credit side of discount column. 3. When cash is received and then sent to bank for deposit, then in the debit side, bank account is debited and cash account is credited in the credit side. Similarly when cash is withdrawn from the bank for office use, the cash account is debited, in the debit side and bank account is credited in the credit side. Such entries are called 'contra entries' and letter 'C' is recorded in the ledger folio column. 4. When a cheque is received from the customer, it should be en- tered in the bank column straightaway because cheques will have to be sent to the bank. In case the cheque is received but the same has been sent to the bank for deposit on a later date, then it is presumed that it is kept in the cash box and treated as cash. 5. When a cheque is endorsed to a person, then the entry will be just like of cash payment. 6. When crossed cheque is received, it is recorded in the debit side in the bank column, but when bearer or other cheque is received, it is recorded in the debit side in the cash column. 7. When bank charges any commission or collection charges for service rendered with due intimation, the customer should enter this item 'n the credit side of the cash column. In case, if these changes are made by the bank without any intimation, then these items should be recorded in the credit side in the bank column. Enter the following transactions in the three columnar cash book of M/s Gunjan Medical Hall and balance it. 2015 Rs. April 1 Cash in hand 10,000.00 Cash in bank account 15,000.00 2 Received cash from Gopal 20,000.00 Discount given 600.00 3 Paid into the bank 5,000.00 4 Paid to Pal & Co by cheque 5,400.00 5 Received from cash sale - Cash 12,000.00 Cheque 8,000.00 8 Paid for cash purchases by cheque 3,600.00 9 Paid by cheque to Kapoor & Son 5,800.00 In full settlement of Rs.6000.00 11 Drew for Office use 10,000.00 Personal use 7,000.00 14 Paid cash for advertisement 9,500.00 18 Drew a cheque for personal use 5,000.00 21 Paid life insurance premium 7,500.00 23 Paid rent 6,000.00 28 Paid salaries to staff by cheque 24,000.00 30 Received a cheque from M/s Puri & Co 14,000.00 in full settlement of their account for Rs.15,000.00 Three columnar Cash Book of M.s Jyoti Medical Hall ‘Dr’ Receipts Payments ‘Cr’ Date Particulars L.F. Discount Cash Bank Date Particulars L.F. Discount Cash Bank 2015 Rs. Rs. Rs. 2015 Rs. Rs. Rs. April 1 To Balance b/d 10,000,.00 15,000.00 2 To Gopal 600.00 20,000.00 3 To Cash A/c C 5,000.00 3 By Bank A/c C 5,000.00 4 By Lily & Co 100.00 5,400.00 5 To Sales A/c 12,000.00 8,000.00 8 By Purchase A/c 3,600.00 9 By Kapoor & Sons 200.00 5,800.00 11 To Bank A/c 10,000.00 11 By Drawing A/c 7,000.00 14 By Adv. A/c 600.00 18 By Drawing /c 5,000.00 21 Bu Drawing Ac 7,500.00 23 By Rent A/c 6,000.00 28 By Salaries A/c 24,000.00 30 To Puri & Co. 1,000.00 14,000.00 30 By Balance c/d 14,000.00 1,200.00 1,600.00 42,000.00 52,000.00 300.00 42,000.00 52,000.00 May 1 To Balance b/d 14,000.00 1,200.00 4. Petty cash book : - In every business organisation, a large number of small payments, such as, for conveyance (bus, taxi), stationery, postage, telegrams, cartage and other miscellaneous expenses are made. - If all these payments are handled by the cashier and are recorded in cash book, the procedure is found to be very cumbersome. - The cashier will be unnecessarily over-burdened and a big cash book will be required to maintain all accounts. - To avoid this, a petty cashier is appointed, who makes all small payments and records them in his cash book which is called the petty cash book. - The petty cashier works on the imprest system i.e. definite sum (say Rs.5000), known as imprest money, is given to the petty cashier to make small payments out of it. - When he has spent a major portion of his imprest money (say Rs.4920/-) he gets reimbursement of the amount spent from the main cashier, so that he will have full imprest amount again. - The reimbursement may be made to the petty cashier on weekly, fortnightly or monthly basis depending on the frequency of payment's made. The petty cashier is paid Rs. 5000 as imprest money on 1st May 2015. He made payments for the following expenses during the month. Record these transactions in the petty cash book. 2015 Rs. May 2 Taxis fare for Manager 370.00 3 Copier papers 240.00 5 Wages to casual worker 640.00 7 Bus fare 40.00 8 Courier service 160.00 9 Postage stamp purchased 150.00 10 Cartage for goods purchased 120.00 13 Cartridge of printer 280.00 16 Ink 20.00 17 Repair to machinery 1,090.00 20 Taxi fare for Manager 350.00 24 Courier service 150.00 26 Repair to furniture 500.00 27 Refreshment for visitors 400.00 28 Carbon paper 160.00 30 Stationery 450.00  ‘Dr’ ‘Cr’ Date Particulars Total Date Particulars Vouch Total Conveyance Stationery Postage & Courier Cartage Misc. Remarks 2015 Amt. 2015 er Amount Rs. Rs. Rs. Rs. No. Rs. May 1 To Cash Recd. 5000.00 May 2 By Taxi fare 1 370.00 370.00 3 By Copier papers 2 240.00 240.00 5 By Wages 3 640.00 640.00 Wages 7 By Bus fare 4 40.00 40.00 8 By Courier Service 5 160.00 160.00 9 By Postage stamp 6 150.00 150.00 10 By Cartage 7 120.00 120.00 13 By Printer cartridge 8 280.00 280.00 16 By Ink 9 20.00 20.00 17 By Repair to machinery 10 1090.00 1090.00 Repair 20 By Taxi fare 11 350.00 350.00 24 By Courier service 12 150.00 150.00 26 By Repair for furniture 13 500.0 500.00 Repair 27 By Refreshment 14 400.00 400.00 Entertainment 28 By Carbon paper 15 160.00 160.00 30 By Stationery 16 450.00 450.00 4920.00 760.00 1150.00 460.00 120.00 2630.0 31 By Balance c/d 80.00 5000.00 5000.00 June 1 To Balance b/d 80.00 1 To Cash recd. 4920.00 Advantages of Petty Cash Book : 1. It saves labour because by preparing petty cash book, all petty expenses are neither recorded in the cash book nor in the ledger. 2. It saves time of head cashier as the petty expenses are recorded in the petty cash book. 3. It is very simple to record all the petty expenses in various columns of petty cash book. 4. There are less chances of fraud as it is essential to keep the vouchers of all petty expenses.  Pharmacy Operation Softwares: usefulness and availability A pharmacy management software system assists in the management of retail products and automates processes such as drug dispensing, inventory tracking, billing and reporting, and so on. It automates and streamlines the different operations required to efficiently manage a pharmacy or health care centre.  BENEFITS OF PHARMACY MANAGEMENT SOFTWARE (PMS) The following are the advantages of Pharmacy Management Software for any company. 1. Recognized Expire Items: The pharmacy software system is a remarkable and ideal technique to manage operations because it doesn't generate bills for things that are of no use. It also informs staff about expired medications and assists the owner in making new purchases. 2. Maintain Separate Folders: The pharmacist can keep a separate folder with the details of the medicines and drugs that are kept in the pharmacy folder. It's an excellent tool that keep informed about the medicine composition and alternative/substitute's. 3. Barcode Label and Patient Medical History: Before the products are distributed to stores, the labels are applied to them. With the help of pharmacy software, it automates the labelling of medications and prints expiry dates. The software may also look up the patient's medical history. 4. Automatic Delivery and Customer Shopping Behaviour: The distribution software has the capability of automatically distributing orders to distribution channels based on the supply date of items and time required to deliver the orders.  BENEFITS OF PHARMACY MANAGEMENT SOFTWARE (PMS) 5. Preventing Medicine Fraud: By entering all prescription information into the Prescription Drug Monitoring Program (PDMP) database and reviewing it when distributing drugs, pharmacies play a critical role in helping to manage the distribution of controlled dangerous substances (CDSs). As information is automatically linked to the patient's history, a pharmacy management system integrated with the PDMP portal allows reducing logging time and effort to just a few clicks. 6. Medication ordering: A Pharmacy Management Software uses reorder points or Periodic Automatic Replenishment (PAR) Levels set up by the pharmacy to generate automatic orders. The system calculates how many items are needed to raise the stock level and adds this quantity to the order. The orders are then sent via an electronic data interchange (EDI) method.  BENEFITS OF PHARMACY MANAGEMENT SOFTWARE (PMS) 7. Reporting: A PMS generates reports that enable pharmacists to quickly identify the best- performing wholesalers and vendors, as well as understand the factors that influence medication ordering. This can help them better prepare for flu season, when specific treatments are in high demand, and calculate PAR levels automatically. 8. Collecting patient information: A PMS gathering information about the patient from a variety of sources, such as the patient's current medication list, medical history, and test results from their hospital's Electronic Health Records (EHR), as well as data provided during a conversation with the patient, such as lifestyle habits, socioeconomic factors, and health goals.  Available Softwares: Some of the common softwares are as follows 1.MargERP9+: It is a business process management software that helps to take care of every requirement of the business including Retail chain, supply chain, sales force automation, Financial Accounting, Inventory, Budgeting, Production, GST etc. It includes following features Stock Management, Expiry Management, Prescription, Rack Management, Alert Management, Online Purchase Import, Re-Order Management, Substitute Availability. 2.WinRx: It is a Windows-based pharmacy management system from Computer-Rx. It is designed with a focus on improving workflow. The most important features of WinRx include prescription monitoring, inventory tracking, and reporting. Workflow Management, Adherance Monitoring, Medication Therapy management, Enhanced Medication Services, Inventory Management, Ordering, Receiving, Reporting, Claim Reconciliation. 3. Liberty Software: It is a pharmacy system designed to help to enhance customer service, increase patient safety, and improve profitability. Liberty Software consists of three solutions - overall pharmacy management, point of sale, and multi-store management. 4. PrimeRx: This system helps retail pharmacies and outpatient hospital pharmacies manage workflow and automate refill processes. The solution was developed in direct response to pharmacist needs and can serve the backbone of a pharmacy-including patient and provider intake, prescription processing, workflow management, claims processing, labelling and dispensing, inventory management, report generation, automated refill management, and patient record management. 5.Pharmaserv: It is an on-premises pharmacy management solution from McKesson. This system helps manage pharmacy operations, medication dispensing, and patient clinical services. The most important features of pharmaserv are Pharmacy workflow, Multi-Location Support, Point of Sale, Perpetual Inventory, Medication Adherance, Medication Synchronization, Prescription Refill Management, Inventory Management, Reporting.  Pharmacy Software Features Prescription Processing Management Feature Description E-Prescribing Send and receive prescription information electronically. Prior Send prescription info to the patient's insurance company to verify if Authorization an Rx is covered and how much the insurance will pay. Requests Refill Allow patients to request refills electronically, in Management person, or over the phone. Set up refills to be automatically filled upon request. Notify patients when refills are running low. Request additional refills from the prescriber when refills run out.  Pharmacy Software Features Prescription Processing Management Feature Description Medication Schedule automatic refills to be picked up at the same time to prevent Synchronization patients from missing doses. Interactive Voice Allow patients to submit refill requests over the phone with Response (IVR) automated voice prompts. New Get notified when a patient has a new prescription filled. Provide Prescription counselling on side effects, drug interactions, and administration (nRx) instructions to improve medication adherence. Management  Pharmacy Software Features Prescription Processing Management Feature Description Electronic Record signatures electronically when patients pick up their Signature prescriptions. Capture Medication Track medications and vaccinations administered to the patient. Administration Record (MAR)  Pharmacy Software Features Point of Sale Feature Description Payment Accept credit card, gift card, cash, or check payments at the POS Processing station or online. Setup automatic payment debits for recurring refills. Over-the- Allow customers to purchase OTC medications that don't require a Counter (OTC) subscription. Keep records of controlled substance and Purchases pseudoephedrine (PSE) purchases.  Pharmacy Software Features Point of Sale Feature Description Barcode Scan a barcode on the prescription to populate patient info in the POS Scanning system to quickly create records for new patients. Inventory Track real-time medication inventory levels and automate purchase Management orders when the stock is running low.  Pharmacy Software Features Other Features Feature Description Document Scan and upload hardcopies of patient insurance information and Management prescriptions. Backup important documents, so one can easily pull up the info which needs any time. Accounts Track balances due at time of pickup and automatically apply interest Receivable to past-due balances as needed. Reporting Create custom reports to get a deeper look at profitability, prescription and patient trends, and overall pharmacy operations.  Customer Relation Management (CRM) Customer relation management (CRM) in community pharmacy is the process of identifying the customers, understanding their needs, and building relationships with them to improve their health, gain their trust, and increase the professional and financial rewards. A variety of tools can be used to automate portions of the CRM process, including interactive voice response (IVR) or CRM software, either from a specialized CRM software provider or as an add- on to the existing pharmacy management system. CRM is also the art of managing the organization's relationship with the customers and prospective clients.  NEED FOR CUSTOMER RELATION MANAGEMENT Customer Relationship Management leads to satisfied customers and eventually higher business every time. Customer Relationship Management goes a long way in retaining existing customers. Customer relationship management ensures customers return back home with a smile. Customer relationship management improves the relationship between the organization and customers. Such activities strengthen the bond between the sales representatives and customers.  Steps to Customer Relation Management It is essential for the sales representatives to understand the needs, interest as well as budget of the customers. Don't suggest anything which would burn a hole in their pockets. Never tell lies to the customers. Convey them only how products are beneficial. It is a sin to make customers waiting. Sales professionals should reach meetings on or before time. Make sure one should be there at the venue before the customer reaches. A sales professional should think from the customer's perspective. Don't only think about own targets and incentives. Suggest only what is right for the customer. Don't oversell. Being pushy does not work in sales. If a customer needs something; he would definitely purchase the same. Never irritate the customer or make his life hell.  Steps to Customer Relation Management An individual needs time to develop trust on organization and its product. Give him time to think and decide. Never be rude to customers. Handle the customers with patience and care. One should never ever get hyper with the customers. Attend sales meeting with a cool mind. Greet the customers with a smile and try to solve their queries at the earliest. Keep in touch with the customers even after the deal. The sales manager must provide necessary training to the sales team to teach them how to interact with the customers.  Management of Customer Relations Many pharmacies have refill reminder programs or automatic refill programs to help their customers remember to refill their prescriptions. These activities build relationship with the customers. But if currently performing them manually by printing out reports from the pharmacy management system and calling each customer personally, one could be making more work for himself. One way to tackle this challenge is to determine the preferred method of communication for each customer.  CRM TOOLS Many companies offer CRM software, including Maximizer and Act. Some companies offer healthcare-specific CRM software, including Microsoft Dynamics CRM for Healthcare and Surado CRM Health. These software solutions provide much more than a reminder to call a patient, or a searchable report to identify patients who are overdue for refills; CRM software can be used to send automatic reminders to patients about upcoming Medication therapy management (MTM) appointments, alert patients with medication compliance messaging, and keep records of communications with patients.  AUDIT IN PHARMACIES A pharmacy audit is a formal review of operations and processes to make sure that pharmacies are compliant with pharmacy regulations and other related agreements. The pharmacy audit process can come in many different types, including desktop, onsite, prepay claims review, and investigational pharmacy audits.  AUDIT IN PHARMACIES Audits are conducted to check whether the Quality Management Systems are functioning properly, and as per guidelines set forth in the Quality Manual, to see whether the desired objectives of the pharmacy are being achieved. By a Quality Audit, the Chief Pharmacist can evaluate the different routine processes and the quality systems in the pharmacy, and check whether the systems are functioning as per requirements. This is achieved by frequent internal audit and a periodic external audit. Based on the audit reports, steps should be initiated to make necessary improvements.  TYPES OF AUDIT The internal audit can be conducted by the chief pharmacist along with the senior staff or members of the management team. The staff deployed for internal audit should be adequately trained for the purpose. Audit may be carried out once in six months, or more frequently. An external audit must be done at least once a year by external auditors, who are competent to do so and are appointed by the management. All audit procedures should be suitably documented. The audit report should be used to analyse the weaknesses and defects in the system so that rectifications are initiated.  SOP OF PHARMACY MANAGEMENT A standard operating procedure (SOP) is a document that specifies the procedures that occur on a regular basis and are relevant to the quality of service provided. The goal of a standard operating procedure (SOP) is to ensure that operations are carried out accurately and consistently. It should be accessible at the location where the work is carried out. A standard operating procedure (SOP) is a set of instructions that must be followed. All modifications to the instructions must be documented and reported to the authorities, as they are the only ones who can validate and approve them.  Objectives of SOPs Eliminate operational errors in pharmaceutical care delivery services by promoting uniformity in the services supplied. Raise the status of pharmacists and increase their willingness to perform better. In most organizations around the world, standard operating procedures (SOPs) take center stage, and pharmacy is no exception.  SOP for Drug Lists Create a strategy for advocacy plan for the SOP. Identify the different categories of pharmaceuticals required. Draw up list using generic and international non-proprietary name (INN) of the drug. Circulate approved list to stake holders within the facility. Enforce rigorous adherence to the EDL (Essential drug list).  SOP for Procurement Medicines/Consumables Prepare an advocacy plan for the sop Confirm the availability of funds Match needs with available funds Identify and verify the suppliers Qualify suppliers Choose method of procurement Prepare an order form Monitor suppliers performance and sanction defaulters Receive and store drugs Facilitate prompt payment to suppliers Commence preparation for next procurement cycle  SOP for Receiving Drug Items Into a Pharmacy Bulk Store Prepare an advocacy plan for the SOP Identify and prepare store space Match the documents with that from the supplier Conduct physical check of every item supplied in the line with the specification Receive items Note the number of items supplied Document all items received Prepare appropriate documents and forward for prompt payment Arrange all items appropriately according to the storage system in use Items requiring cold storage should be put in cold store or in the refrigerator immediately. Ensure the store is locked and the key is returned to the appropriate place for safe keeping  SOP for Drug Storage Prepare an advocacy plan for the SOP Ensure the pharmaceutical store is centrally located Ensure the a tile floor finishing and that pallets and shelves are provided Ensure the that the pharmaceutical store is solely used for