Inventory is a catalog of items, goods, assets, provisions, materials, stock of an entity. Inventory management is for getting inventory to the right places at the right times through the correct placement of resources, fast inexpensive product reordering, product forecasting, plus the efficient product receiving and storage. Inventory management also aids in the structure and control of items in supply chain, it is even integral to operations management in pharmacy. (Lockard, 2010)
Inventory can be used to improve operational efficiency as it alongside expenses of supplies represents a large portion of non-labour cost in the industry. (Langabeer & Helton, 2015)
A manager must keep track of all incoming stock, departments distributed to, with dates and location in records (Bloodgood, n.d.)
Supply Chain is the “flow of medical goods and services from manufacturer to patient”, and supply chain management is the managing of upstream relationships (suppliers) and downstream relationships (patients). (Belliveau, 2016)
Supply Chain Management is the integrated management of all product information and financial flow in a network designed to pull products from manufacturers to consumers. In healthcare. (Langabeer & Helton, 2015)
Management of inventory and supply chain is a complex balancing act, that managers need to master as supply expense ratio is 25-50% of all hospital costs.
Supply Chain is the “flow of medical goods and services from manufacturer to patient”, and supply chain management is the managing of upstream relationships (suppliers) and downstream relationships (patients). (Belliveau, 2016)
Supply Chain Management is the integrated management of all product information and financial flow in a network designed to pull products from manufacturers to consumers. In healthcare. (Langabeer & Helton, 2015)
Management of inventory and supply chain is a complex balancing act, that managers need to master as supply expense ratio is 25-50% of all hospital costs.
A full grasp of the Challenges will aid in the attainment and application of solu and the achievement of effectivenes. These challenges are:
Price vs Preference- Provider may selecta particular product for its price while hospital executives may prefer a different product because of its familiarity (they are trained to use it).
Generic vs Customized products- Provider may have a specific brand/type in stock for general use, but some patients may want something different for example latex gloves or latex-free gloves.
Drug shortage- absence of some drugs in stock may be cause by shortage coming from manufacturer’s end, that is, could be caused by a scarcity of production materials of regulation challenges.
“Misaligned incentives and independent goals can disrupt the flow of the supply chain for many healthcare organizations”. (Bellivueau)
“Misaligned incentives and independent goals can disrupt the flow of the supply chain for many healthcare organizations”. (Bellivueau)
Compartmentalization of supplies data/information by various units will lead to inability to effectively track available inventory and usage data to enable purchase forecasts. Hence a lack of visibility into supply chain and inventory levels.
Product order error- can lead to loss of time (time spent ordering at first, then re-ordering the correct one), medication error (poor health issues, re-admission of patient which payor may then reject invoice), loss of money (purchase of a drug not required and may not be used also may attract extra or express shipping cost), relocation/loss of patient/client (if time-bound, patient has to be sent to a different provider), friction between Doctor/Nurse and support staff (if mistake happens while order is being transcribed) and so on.
Product order error- can lead to loss of time (time spent ordering at first, then re-ordering the correct one), medication error (poor health issues, re-admission of patient which payor may then reject invoice), loss of money (purchase of a drug not required and may not be used also may attract extra or express shipping cost), relocation/loss of patient/client (if time-bound, patient has to be sent to a different provider), friction between Doctor/Nurse and support staff (if mistake happens while order is being transcribed) and so on.
Recalls-In the past decade, medical device recalls have increased 97 percent. Recalls can throw a wrench in the flow of hospital supply chains, requiring resources to be reallocated to address the recall and remove the item or drug off the floor. (“10 Trends in Hospital Supply”, 2014)
Overstocking- can tie down capital, lead to waste, require higher number of staff to manage, theft/misappropriation and so on.
Overstocking is a symptom of poor supply and inventory visibility and may be the most challenging of issues facing inventory and supply chain management. And so on.
Overstocking- can tie down capital, lead to waste, require higher number of staff to manage, theft/misappropriation and so on.
Overstocking is a symptom of poor supply and inventory visibility and may be the most challenging of issues facing inventory and supply chain management. And so on.
According to Langabeer and Helton, a manager’s strategy for supply chain should be shaped around these four quadrants: Organizational goals, Financial, Customer Service and supplier. (2015)
Below are some strategies that are needed to effectively manage supply chain, it is worthy to note that each case/organization is peculiar, hence there is no one size fits all, but these cover strategies for common inventory and supply chain management issues, yet can be customized to fir organization.
Identifying the level of inventory / supply needed to sustain clinical operations is key to a successful management of inventory and supply chain. Best is to know the replenishment frequencies for each inventory by using Economic Order Quantity. (EOQ) is the number of units that should be added to inventory with each order to minimize the total costs of inventory—for example holding costs, order costs, and shortage; as this prevents overstocking and understocking.
I would monitor contract processes and contracts themselves, even if I use Group Purchasing Organization(s) to save my organization cost, I will still keep close check on clauses, expiration and to ensure I don’t end up with supply gaps or below required inventory levels.
Physical sorting of storeroom, removing unnecessary items, creating an order of the layout of the remaining relevant items, categorizing storerooms per content type, informing users of the storerooms new system and maintaining the new system with audits at intervals.
Strength the collaborative relationship between my organization and supply partners/manufacturers, supply levels can be better managed if both sides are aware and work together to ensure use, avoid spoil or expiration while in stock.
Also will follow Sampson’s advice to use cost-accounting systems to “run detailed information related to actual and incremental costs of each service” under an effective pricing strategy, that is, capture, track and manage information on supplies, labor and other expenses. (2016)
Avoiding waste by initiating aspects of Lean management to ensure quality process improvement.
As a Manager cost transparency can help me use the prices and data to monitor and manage inventory more efficiently, hence aid in the creation of more informed purchasing contracts with manufacturers my organization is in business with.
Different automation tools and software are now available that can help in inventory and supply chain management for example automated requisition systems, auto dispensing machine, high-frequency RFID tags, kanban, electronic data interchange and data analytics to manage all can be managed through an ERP for yhe whole organization.
The engagement of clinical staff can also be pivotal in establishing cost-saving habits, to discourage hoarding, and empower providers to keep cost conscious when delivering patient care.
Whichever strategy is applied, driving down costs while icreasing quality of services through continuous process improvement hereby increasing profit/growth is the bottomline for managers in healthcare, be it for-profit or not-for-profit respectively
References
“10 Trends in Hospital Supply Chain Management” (2014, April 30th) Retrieved from https://www.beckershospitalreview.com/supply-chain/10-trends-in-hospital-supply-chain-management.html
Belliveau, J., (2016, August 5th). Exploring the Role of Supply Chain Management in Healthcare Retrieved from https://revcycleintelligence.com/news/exploring-the-role-of-supply-chain-management-in-healthcare
Bloodgood, P., (n.d.). Inventory Control In Healthcare Facilities Online Video Accessed at https://m.youtube.com/watch?v=a_e-czbc-Kw
Langabeer J. R. II, & Helton, J., (2015). Health Care Operations Management: A System Perspective. 2nd Edition (Pp 6-287) Jones and Bartlett Learning.
Lockard, R., (2010, November 24th). Inventory Management vs Inventory Control Retrieved from https://inventorysystemsoftware.wordpress.com/2010/11/24/inventory-management-vs-inventory-control/
Sampson, C., (2016, May 19th). 5 Ways to Improve Healthcare Supply Chain Management. Retrieved from https://revcycleintelligence.com/news/5-ways-to-improve-healthcare-supply-chain-management
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