I don't think there's a "perfect" system, but the key to an efficient system is accountablilty. The easiest method I've used is the ledger book system. You have columns for:
Borrow or Lend
the date
the product
the quantity
the facility
the person FROM the facility (I feel that if there a person attached to the drug, it's easier to keep track of)
the date of the transaction
the date of replacement
and again, the other person involved in the transaction.

It's a lot of initial setup, and it may be a pain in the beginning, but it gets easier as everybody gets used to the system. A colleague of mine who also used this system went as far as getting the email address of the other person in the transaction; it was normally the person borrowing a drug. And once a month, she'd send out emails and a detailed list of everything people owed her. Granted, that part may be a little over the top, but that's the level of accountability you can have with a system like that.

Mike

Name of Facility: Summerdale Enterprises, Inc.

City, State: Publishing

Years as a Buyer: > 30

We have a process much like Mike's process. We actually have a 3 ring binder for the borrowing and one for the lending. I have also added columns for recording either repayment or billing where I fill in the date that the action is taken. I reconcile the logs at the end of the month. We do pretty well with getting everything in the books. I will tell you that it has taken a long time to get to this point and a lot of hunting people down (they do not like to see me coming with these questions). Considering where we started, we have made vast improvements in 4 years. Sometimes I also give gentle reminders at staff meetings when I see us start to slip.

Name of Facility: 330

Years as a Buyer: 4 in Pharmacy & 20 in retail hardgoods