Inventry control

The proper controls and processes can save millions in healthcare costs by enabling a hospital to efficiently order and store just the right amount of supplies needed for patient cases while tracking cost, tier pricing and patient charges associated with supplies.

1. Inventory Control
By
Mr. Ravi Rai Dangi
Assistant Professor
Fellowship in Neonatal Nursing
MSc. Child Health Nursing

2. Introduction
Inventorycontrolinhospitalsismorethanjust
procurementandusage.
Thepropercontrolsandprocessescansave
millionsinhealthcarecostsbyenablingahospital
toefficientlyorderandstorejusttherightamount
ofsuppliesneededforpatientcaseswhiletracking
cost,tierpricingandpatientchargesassociated
withsupplies.

3. What is inventory:
Itisthestocktoensureuninterruptedsupplies,the
idleresourceswhichhavefutureeconomicvalue
andcushionbetweenestimatedandactualdemand
ofmaterials.

4. Importance of maintaining
inventory
Itprovidesandmaintainsgoodcustomersservice.
Enablessmoothflowofmaterialsthrough
productionprocess.
Providesprotectionagainsttheuncertaintyof
demandandsupply.

5. Ensureareasonableutilizationofequipment
andeffort.
Possibilityofdiscount,ifpurchase.

6. Inventory control
Inventorycontrolistheprocessbywhichinventoryis
measuredandregulatedaccordingtopredetermined
normssuchaseconomiclotsizefororder,safetystock,
minimumlevel,orderleveletc.

7. Inventorycontrolisaboutproductavailabilityand
balancingthecostsofownershipwiththecostof
producing,whichincludespurchasing,receivingand
paying.

8. Inventorycontrolmeanskeepingatrackof
inventory,sothatthematerialsareavailablewhen
needed.
Inventorycontrolmeasuresandregulatesto
predeterminethesizefororder,safetystock
minimumleveloforders,andmaximumlevelof
order.

9. Inventorymanagement system
Itprovidesinformationtoefficientlymanagethe
flowofmaterial,effectivelyutilizepeopleand
equipments,coordinateinternalactivities.
Inventorymanagementdoesnotmakedecisionor
manageoperation;theyprovidetheinformationto
managerswhomakemoreaccurateandtimely
decisiontomanagetheirdecision.

10. Objective of inventory control
Tosupplythematerialintime.
Togivemaximumclientservicesbymeetingtheir
requirementseffectively,smoothly,and
satisfactory.

11. Tominimizeinvestmentsininventories.
Tominimizeidealtimebyavoidingstrokeout
andshortage
Toavoidshortageofstoke.
Tominimizethelossduetodeterioration,
obsolescence,damageofstoke.

12. Tomeetunforceinfuturedemand.
Toaverageoutdemandfluctuation.
Tobalancevariousinventorycostsuchascarrying
andordercost.

13. Importance of inventory control
Toprovidemaximumsupplyservice,consistencewith
maximumefficiencyandoptimuminvestment.
Toprovidecushionbetweenfor-castedandactual
demandformaterials.
Tohaveoptimumlevelofinventory;nottoolargenot
small.

14. Toeliminateduplicationinordering.
Totakecareoffluctuationindemandandlead
time.
Totakecareofincreasingprizetendencyof
commoditiesorrebateinbulkbuying.

15. Toincreasetransportationefficiently.
Tominimizetheinventorycost.
Tominimizethewaitingtime.
Toprovidethecheckagainstthelossofmaterial.

16. Tobetterutilizationofstokesavailable.
Tofacilitatecostaccountingactivities.
Tolocateanddisposeinactiveandobsoletestore
items.

17. Technique of inventory control

18. ABC analysis (always better
control):
ABCanalysisisabasicsupplychaintechniquein
inventorycontrol.Itisverycommontoolforall
largeinventoryitems.

19. ABCclassificationisasystemofcategorizationof
itemwitheachclassishavingadifferent
managementcontrolassociatedandisbasedoncost
factororontheirannualconsumptionvalue.

20. Pareto’stheory-
Accordingtohistheory10%items
consumeabout70%ofbudget(Group-A).Thenext
20%consume20%offinancialresources(Group-B)
andremaining70%itemsaccountsforjust10%of
budget(Group-C).

21. Principles of ABC analysis
Theanalysisisdependingonitsannualconsumption
valuesratherthanunitcost.
ThelimitforABCcategorizationarenotuniformedbut
dependsonsizeoforganization,itsinventoryaswellas
numberofitemcontrol.

22. Theanalysisdoesnotdependontheimportanceof
itemratherbasedonmaterialprize,credibilityand
availablestatusofmaterial,materialphysical
characteristics,andfrequencyofmaterialused.
Italsodependsondegreeandcharacteristicsof
controltobeexercisedbythemanagement:the
necessityofcontrol,thenecessityofwhich
materialtobeplacedundercontrolandparticular
characteristicsofmaterial.

23. Comparison of ABC analysis
ITEM

24. Procedural steps
Collectallthedataofinventoryandpreparealistofall
theitemsofstoresindicatingtheunitpriceofeachitem
andannualconsumption.
Calculatetheirannualusagein
Rs.(annualconsumptioninunitsxunitcostsinRs.=
annualconsumptionvalues).
Forstores,itwillbeQualityissuedxunitrateofeach
item.

25. Arrangealltheseitemsinthedescendingorderof
totalvalueofannualconsumptionofeachitemin
rupees.
Mentiontheitemnumbersagainsttheirannual
consumption.
Calculatecumulativeannualsconsumptionvalue
percentage.
Categorizeitemsaspertheconsumptionvalue
(cost)percentage.

26. Advantage of ABC analysis
Investmentininventorycanbemaintained.
Easytocontrolthewastageofcostlyitems.
Helpsinmaintainsafetytothetotalcost.
Easytomaintainstockandturnoverrate.

27. Helpstoexerciseselectivecontrolwhen
confrontedwithlargenumberofitems.
Rationalizethenumberoforders,numberofitems
andreducetheinventory.
Showsvisibleresultsinashortspanoftime.

28. Themanagerisabletocontroltheinventories
speciallycontrolling‘A’items.
Helpstopinspointtheobsoletestocks.
Helpsinreducingclericalcost.

29. Disadvantage of ABC analysis
Properstandardizationandcodificationofinventory
itemsisrequired.
Considersonlythemoneyvaluenottheimportanceof
itemsforfunctioning.
PeriodicreviewsbecomedifficultifonlyABCanalysisis
recalled.

30. Applicability
Ithasuniversalapplicationforfieldsreturning
selectivecontrol.
Itextendsalmostalltheaspectsofmaterial
managementsuchaspurchasing,receiving,and
inspection.
Itcanbeusedinanysettingtocontrolthecost.

31. VED Analysis
ItmeansVital,EssentialandDesirableAnalysis.
Thematerialsareclassifiedbasedoncritically
thatonfunctionalbasis.
Thedegreeofcriticallycanbestatedaswhether
amaterialvitaltotheprocess,essentialor
desirablefortheprocess.

32. Advantages of VED analysis
Itisusefulformonitoringandcontrolofstores
andspareinventorybyclassifyingtheminto3
categoriesviz.,Vital,Essential,Desirable.
Determinethecriticalityofanitemanditseffect
onproductionandotherservices.

33. Itisspeciallyusedforclassificationofspare
parts/items.Ifapartisvitalitisgiven‘V’
classification.Ifitisessentialthanitis‘E’
classificationandifitnon-essentialthepartis
given‘D’classification.
Itisusefulincontrollingandmaintainingthe
stockofvarioustypes.

34. Combination of ABC & VED
analysis
Wecancombinebothandclassifythematerials
dependingonboththeconsumptionvalueandthe
criticality;itwillgiveusafruitfulresult.Thiscan
bedoneinnineways

35. Combination of ABC and VED analysis
V E D ITEM COST
A AV AE ADCategory110 70%
B BV BE BDCategory220 20%
C CV CE CDCategory370 10%
•Category1=Needsclosemonitoringandcontrol
•Category2=Moderatecontrol
•Category3=Noneedofcontrol

36. Vitem Eitem Ditem
Aitem Constant
controland
followup
Moderate
stock
Nilstock
Bitem Moderate
stock
Moderate
stock
Lowstock
Citem HighstockModerate
Stock
Very low
stock

37. Advantage of ABC & VED analysis
Helpstomanagementtodecidethematerialpolicy
andwhattheserviceslevelareexpectedtoseethatno
difficultyisfaced.
Tocontrolthestocklevelsbyvisualizingthe
inventorycarryingcost.

38. Nurses’ role in inventory control
AwardisoftenreferredtoasNursingunit.Thisimplies
thatawardisactuallyunderthecontroloftheNursein-
chargeforitsmaintenanceandforrunningitsdayto-day
patientcaractivities.

39. TheNursingresponsibilitiesinrelationto
materialmanagementare:-
Ensuringregularandadequateflowofnecessary
equipment,supplies,drugsandsolutions.
Monitoringandsustainingthequalityandsafetyofthe
materialsusedincludingdrugsandsolution.

40. Issuingofitemsonthebasisof“First”inFirstout’’,and
regularcheckingofexpirydatesofdrugscontribute
towardssafety.
Indenting,receiving,storing,checkingandtimely
replenishingofallnecessaryequipment,supplies,drugs
andsolutions
Maintainingofemergencyandbufferstocks.
Arrangingforpreventivemaintenancewherever
necessary.

41. Maintaininginventoryandstockofallitemsandsupplies.
Arrangingforcondemnationofarticlesinaccordance
withthedownpoliciesoftheorganizationand
maintainingadeadstockregister.
Arrangingandassistinginauditofmaterials.
Participationinpolicymakingformaterialmanagement
Participationintender/procurementsub-committals

42. OrientingNursingpersonnelonmaterialmanagement
policiesfromtimetotime.
Evaluationtheefficacyofthematerialmanagement
systemfollowedinparticularNursingunit.

43. Thank you