Buffer stock for a clinic when deliveries run late
How a clinic works out buffer stock for medicines and consumables when supplier deliveries are unreliable, and what Achekam's low-stock flag can do today.
By Achekam · · 5 min read · For Healthcare businesses in South Africa, Nigeria, Kenya
The wholesaler said Tuesday. It is now Friday, the delivery has not come, and the clinic has two boxes of a commonly prescribed antibiotic left with a full afternoon list ahead. The nurse phones a pharmacy down the road to borrow stock; the doctor writes scripts for patients to fill elsewhere. Nobody is harmed, but patients leave unhappy and the clinic loses the dispensing income.
Clinics in South Africa, Nigeria and Kenya know this pattern well: a supplier's stated delivery time is a hope rather than a promise, and it varies with roads, customs, stock-outs at the wholesaler and public holidays. The answer is buffer stock, a deliberate cushion held for exactly that variation. This article explains how to think about it, how to weigh the cost of holding more against the cost of running out, and what Achekam can and cannot do to help at the moment.
Start with demand during the lead time
The lead time is the gap between placing an order and having the stock on the shelf. During that gap, the clinic keeps using the item, so the key figure is how much it uses while waiting.
ACCA's explanation of stock control gives the simple case. With constant demand and a fixed lead time, the re-order level equals demand during the lead time. Its example: where the lead time is five days and daily demand is 30 units, the re-order level is 150 units. Order when stock falls to that level, and the new delivery arrives just as the last unit is used.
Real clinics rarely have that comfort. Demand rises during flu season or a local outbreak, and lead times stretch when a supplier is short. Both make lead-time demand uncertain.
Buffer stock: the cushion on top
ACCA defines buffer inventory as the amount by which the re-order level exceeds average demand in the lead time. It is needed when lead-time demand is uncertain, to reduce the chance and the cost of running out.
In words: work out how much of the item you usually use during a normal delivery wait. Then ask how much more you would use if the delivery came late, or if demand spiked while you were waiting. That extra is the buffer, and the re-order level becomes normal lead-time use plus the buffer.
A practical way to set it for each important item:
- Look back over recent orders and note how long each delivery actually took, not how long the supplier promised.
- Note the longest realistic wait, setting aside one-off disasters.
- Estimate usage over that longer wait, using a busy period rather than a quiet one.
- The difference between usage over the longest realistic wait and usage over the normal wait is a starting buffer.
Review it after each season. A supplier who becomes reliable earns a smaller buffer; one who gets worse needs a bigger one, or a backup supplier.
Running out against holding more
Buffer stock is not free. ACCA lists the advantages of holding inventory as meeting customer demand, taking bulk discounts and reducing total annual re-ordering cost. The disadvantages are storage costs, the cost of capital tied up, and deterioration, obsolescence and theft.
On the other side, Investopedia describes a shortage cost as the revenue lost because a business has insufficient inventory to fill an order, and explains that setting a reorder point helps a business avoid running out. For a clinic, a shortage also costs patient trust, and for some items the clinical cost of a delay matters far more than the money.
That is the trade-off to make item by item:
- Critical, low-cost items (gloves, syringes, common antibiotics): a generous buffer costs little and protects a lot.
- Expensive, slow-moving items (specialist injectables, implants): a large buffer ties up cash and risks expiry; a smaller buffer plus a reliable emergency source may be wiser.
- Items with no substitute: lean towards holding more.
The ACCA article on stock control works through re-order levels, buffer inventory and the costs of holding stock, with examples.
Keeping the cushion fresh
For medicines, deterioration is the cost that bites. A buffer that sits untouched at the back of the shelf eventually expires. Two habits prevent that:
- First expiry, first out. Place new deliveries behind existing stock, so the buffer is always being used and replaced rather than sitting still.
- Check expiry dates during counts. When you count an item, note the earliest expiry date. A buffer that is about to expire is not a buffer.
How often to count which items is covered in counting a practice's costliest items most often.
What Achekam can and cannot do yet
Achekam keeps stock quantities that move with the clinic's sales. A till sale takes the sold quantity off stock in the same step, at the till's location, and will not take stock negative unless the business allows it. With the Warehousing add-on, the clinic can keep separate stock locations, such as the main dispensary, a store room and a branch, each with its own quantity on hand, so it can see where the buffer actually sits.
There is a limit you should know about. A product's reorder level cannot currently be changed from any screen, so the low-stock flags use a fixed default. The flag cannot reflect the buffer you have worked out for each item. Until a reorder level setting exists, keep your re-order levels on a short list beside the stock report, and check quantities on hand against it when you place orders. Setting items up properly in the first place is covered in setting up dispensary items before the first sale, and the trade-off between bulk discounts and holding costs is explored from a hospitality angle in should a bar take a supplier's bulk discount?.
Set the first few buffers this month
Choose the items whose absence would hurt most: the ones you have borrowed or turned patients away for. For each, pull the dates of your last several orders and deliveries, work out the realistic longest wait, and set a re-order level that includes a buffer. Write the list down, put it where the person who orders can see it, and review it after the next busy season.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
