Datarithm: Taking Inventory Management to the Next Level

Bill Lockwood, PTMR publisher, talks with Datarithm's David Belinski about the importance of inventory management and key features in Version 3.0, the company’s next software release.

This company, located in the Finger Lakes region of central New York State, is focused on improving inventory management for independent pharmacies. In this interview with Bill Lockwood, PTMR publisher, we hear from David Belinski, president of Datarithm, on the importance of inventory management and key features in Version 3.0, the company’s next software release.

PTMR: Let’s start with a little background on the Datarithm.

David Belinski: Founded in the early 2000s as Rx Net Services by a pharmacist, a medical sales rep, and a software engineer, the company focused on streamlining various pharmacy tasks to save time and money and pioneered store-to-store Rx inventory transfer. In 2009, the company was rebranded as Datarithm to better reflect the broader focus on overall Rx inventory optimization through demand forecasting, automatic monthly reorder-point adjustment, daily inventory balancing

recommendations such as wholesaler return and transfer, and intelligent cycle counting, as well as performance dashboards and analytics.

Today, as an industry leader, Datarithm provides inventory management solutions to pharmacies of all sizes throughout the continental United States, Puerto Rico, and Canada.

PTMR: The way I see it, managing the cost side of prescriptions and cash are more important than ever, considering the lower reimbursement pharmacies are experiencing, particularly with the DIR (direct and indirect remuneration) fees levied on prescriptions. What are your thoughts here?

David Belinski, President, Datarithm

Belinski: I couldn’t agree more. Pharmacies that don’t manage their cost of goods sold can be unprofitable and cash starved. That said, I would bend the notion of “cost” to include overall inventory investment levels. In other words, certainly try to obtain the very best pricing, but also vigorously avoid overstocking, because carrying surplus inventory is a financial boat anchor that does nobody any good. For five to six days of every week, for most pharmacies, orders placed today are delivered tomorrow. Over-ordering and carrying surplus inventory are symptoms of a sick pharmacy likely struggling with cash flow and liquidity, facing unnecessary carry costs and exposed to excessive future risk and costs associated with expired returns. Understocking is also problematic, as IOUs and stockouts impact customer service and retention. Remember, the only expenses that pharmacies can truly control are inventory and payroll. With inventory representing 70% and payroll 10% of overall operating expenses, according to PBA Health, with an average monthly spend of $230,000 according to the NCPA [National Community Pharmacists Association], there is substantial opportunity to reduce costs and risk by seeking the best pricing possible, reducing surplus and, overall, focusing on Rx inventory optimization.

To best act on the opportunities pharmacies have to improve their position, operating perpetual inventory is a must. If a pharmacy is not running perpetual inventory, we highly suggest a conversion. If already running perpetual inventory, automation of replenishment point updates and balancing will provide time and cost savings. Further, on-hand accuracy is a must, so we also recommend cycle counting. Lastly, once running perpetually, EDI [electronic data interchange] ordering presents a huge time-saving option for end-of-day ordering.