inventory management.pptx for reference for PGs

inventory management an important part of hospital management

1. INVENTORY MANAGEMENT

2. CONTENTS Management Basic principles of management Inventory Management Activities in Inventory Management Order Methods

3. WHY DID I CHOOSE THIS TOPIC?

4. Management It is the art of creating the environment in which people can perform and individuals can cooperate towards attainment of organisational goals. It is the art of removing blocks to such performance and a way of optimizing efficiency in reaching goals; by Harold Koontz.

5. Management is a distinct process consisting of planning, organizing, actuating and controlling, performed to determine and accomplish stated objectives, by the use of human beings and other resources; by George R Terry .

6. Basic Principles of Management Division of work according to the ability, capacity and aptitude of the workers is essential in any organisation for optimal utilization of scarce human resource and to maximize productivity in any form. Well-defined responsibility leads to accountability and thus enhances performance of individuals. Organisational goals should receive preference and are more important then individual goals.

7. An employee should ideally receive his/her orders only from one superior since multiple commanding authorities would lead to confusion and chaos. Remuneration in form of pay and allowances should be pre-determined for all personnel, to avoid uncertainty. Employees should function in well defined functional chain of senior-subordinate relationships, called scalar chains Team spirit (spirit-de-corps) is essential for any organisational work.

8. As Doctors why we must study management!

9. The Planning Process in Health Sector Situational analysis. Objectives and goals. Resources and constraints. Delegating responsibilities. Assigning the time frame. Evaluation, monitoring and feedback. Re-planning.

10. INVENTORY MANAGEMENT The systematic and scientific process of planning, implementing and controlling the efficient and effective storage and flow of resources(goods & services)from point of origin to the point of consumption in order to meet the customer’s requirements.

11. Functions of Inventory Management To provide maximum supply service, consistent with maximum efficiency and optimum investment. To provide a cushion between forecasted and actual demand for a material.

12. The basic issue involved in inventory management is to ensure that adequate amount of raw materials are available to meet the demand of the organisation. While at the same time ensuring that too much inventory is not accumulated and also that there are no ‘stock-outs’ in the organisation. Thus, a well managed organisation would necessarily have a higher inventory turn-over rate and lesser cash would be blocked as inventory/stocks.

13. Inventory Management in Health Care Setup Any healthcare establishment is heavily dependent on material, equipment's and medicines and hence inventory management assumes great importance since availability of the right item, at right time, right place and in the hands of the right person can often make the difference between life and death in a hospital.

14. Activities involved in Inventory Management Tendering, procurement and inspection. Storage, standardization, codification and classification. Materials accounting and physical distribution. Transportation. Maintenance and Repair of materials. Condemnation and disposal of stores.

15. Tendering, procurement and inspection: Any organisation has to resort to purchasing of goods or services to ensure an uninterrupted flow of materials, a minimum inventory investment and to buy materials/ services at a reasonable cost .

16. Steps involved in purchasing

17. Storage, Standardization, Codification & Classification: The storage system Any storage system in an organisation consists of the following sub- systems which work together to cater to the existing demands and also the further growth potential of an organisation; Receipt system. Maintenance & upkeep system. Issue system.

18. Codification of goods Alphabetical system CLASS GROUP CODE PATIENT BED (PB) IRON(I) HYDRAULIC(H) PB-I-H

19. Numerical system CLASS SYSTEM GENERIC NAME STRENGTH FAMILY OF DRUG CODE DRUG(01) MUSCULO SKELETAL(38) IBUPROFEN 400(08/4) TABLET(1) 1-38-08/4-1

20. Combined alphabetical and Numerical. Other systems; British and Kodak systems.

21. Accounting of Stores It is essential that in order to demand the optimal material, the stock held with the stores must be accurately known and maintained. This is important to prevent over-ordering of material and is absolutely essential to avoid ‘stock- outs’, both of which are detrimental to functioning of an organisation.

22. In order to continuously keep a track of the material available in stock, the following systems are adopted: Bin Cards Stock identification cards Material requisition slip Material received note Stores ledger Material return note Material transfer note

23. Concept of Flow of Goods and Stores Accounting Flow of goods is of utmost importance in any health care setup since the problems of obsolete items, expired medicines and old stocks are faced by every store keeper in a hospital. Such avoidable wastages not only increase the cost of managing a hospital but may also occasionally result in a fatality due to issue of out of date medicine to a critical patient.

24. some of the methods followed for flow of goods and stores accounting are First In, First Out (FIFO) : Material from the oldest stock is issued first with the view to turnover the stock. Last In, First Out (LIFO) : Materials which are received last are issued first in this case, but it usually results in poor inventory management and hence is generally not recommended in health care establishments.

25. Specific cost method : Provides the most realistic valuation of inventory stock and physical stock-taking of stores can be done any time of the year. Under this method, values of the material charged off / taken on charge are identical to the material issued / received and hence is the most suitable method of maintaining stocks in commercial organisations. Average cost method : Average cost of each item issued from stores/ received at stores is assessed and this value is taken for maintaining the cost of inventory held by the organisation. Though easy to follow, this method often leads to inaccurate values of inventory in the organisation

26. Types of Inventory Management ‘Pareto’s law’ forms the basis for inventory control, wherein it is theorized that a few items in the inventory will account for a large proportion of total cost whereas bulk of the items will account for only a small percentage of the cost or importance of total inventory. Thus, basic principle of inventory control is based on the effort to closely control costly/critical items in inventory all the time, while other, less important/less costly items could enjoy less stringent controls.

27. ABC analysis: It is also popularly known as ‘Always Better Control’. This type of analysis is based on the annual cost of drugs. It is usually seen that 10% of the stores would cost 70% of the total resources (Group A items ); 20% of the items would cost around 20% of total resources (Group B items) and remaining 70% of items would cost only 10% of the total resources (Group C items).

28. ACTIVITY GROUP A GROUP B GROUP C MONITORING VERY STRICT STRICT MODERATE SAFETY STOCK TO BE KEPT LOW MEDIUM HIGH LEVEL OF CONTROL TIGHT MODERATE LOW ESTIMATES OF REQUIREMENTS VERY ACCURATE MODERATELY ACCURATE MAY BE LOW FREQUENCY OF PURCHASE MOST FREQUENT LESS FREQUENT LEAST FREQUENT TURN OVER MAXIMUM MEDIUM LEAST MANAGEMENT INVOLVEMENT TOP LEVEL MIDDLE LEVEL LOWER LEVEL

29. VED : Based on criticality and importance of consumables and not merely on the annual cost of consumption, items are classified as Vital (V), Essential (E) and Desirable (D). Vital items (V) are items like Oxygen which are vital for functioning of a health care establishment and whose shortage will have serious adverse effects on routine functioning of the organisation. Such vital items should be monitored by top management, irrespective of their cost and their availability should be ensured with sufficient stocks available in medical stores.

30. Essential items(E) are the items whose shortage or non– availability can only be afforded for a short time (such as intravenous sets & IV fluids in a hospital) and if their shortage continues for anything more than the shortest time, the functioning would be affected seriously and adversely. Desirable items(D) are those items whose shortage would not affect the routine functioning of an organisation even if the shortage is for a long time

31. Combination of ABC & VED V E D CATEGORY MANAGEMENT A A V A E A D 1 Most Important B B V B E B D 2 Important C C V C E C D 3 Least Important

32. SDE analysis FSN analysis HML analysis GOLF analysis

33. The Order Methods The determination of optimum order quantity is influences by the forces pushing in opposite directions. Large purchase quantity maximizes inventory carrying cost and minimizes ordering cost while converse is true when purchase quantities are reduced.

34. HOW MUCH TO ORDER Economic Order Quantity: Most economical amount at which ordering and carrying cost is equal which is given by; 2D.Oc Cc Where; D= Annual demand of items Oc = Cost of each unit Cc= Inventory Carrying cost

35. Two Bin System: is the method of ordering in which the order is placed when the stock of an item reaches a certain predetermined level. For this it is essential to know the Lead Time Buffer Stock Reorder Level

36. Cyclic System: Periodically stocks are checked to know the consumption pattern and orders placed to bring the stock to the desired level.

37. Maintenance and Repair It has been noticed that only 50% of the equipment in any health service facility are in usable condition at a given time,so there is a need to develop an organised system of preventive maintenance of equipment including the transport for smooth running of services. In State Government,a State Health Transport Organisation has been created to take care of vehicles belonging to public health services.

38. Repair Of Equipment Maintenance and repair should go hand in hand. Engineering unit should have the responsibility and accountability for repairs and should be able to take spot decisions.

39. Records needed for maintenance: History sheet of equipment. Log book for equipment. Performance record of equipment.

40. Condemnation and Disposal Criteria for Condemnation: The equipment has become Non functional and beyond economical repair. Non functional and obsolete. Functional but obsolete. Functional but hazardous. Functional but no longer required.

41. The routine items like B.P intruments,ECG machines etc are condemned on the recommendation of condemnation committee or HOD or in house engineering unit. Disposal of condemned articles is carried out by auction or burning.

42. TAKE HOME MESSAGE

43. Bibliography Text Book of Public Health and Community Medicine- Rajvir Bhalvar MME-201; Block-6: Policies, Planning and Management

44. THANK YOU