material management ppt planning and procurement of material manargment ms word.pptx

Nursing Mgt-

1. & VED ANALYSIS SUBMITTED TO: SUBMITTED BY: Dr. Mrs. K . Suga nthi , M.Sc (N), Ph.D., E . Kalpana , Nursing tutor M.Sc Nursing I I year, Govt. College of Nursing, Govt. College of Nursing, Cuddalore. Cuddalore.

2. INTRODUCTION Material are the major source cost factor in an organisation it is very important in functions of management In health care institution about 40% ,of budgetary allocations is on procurement and management of stores It requires planned and progressive provisioning and procurement to keep machine running Traditionally nursing unit,laborat,X -ray and other department made purchase and maintained their own inventory. Now-a- days,in practice there are decentralised and centralised supplies of material management.

3. Meaning According to Webster, the word Material Relating To production and distribution of goods, economics,social relationship between owner and labor.

4. Definition of material management Material management can be regarded as the function responsible for co-ordination of planning sourcing purchasing, moving, storing and controlling materials in an optimum manner, so us to provide service to the consumer at minimum cost.

5. MATERIAL MANAGEMENT FUNCTION Planning for materials Demand estimation Purchasing Inventory management Inbound traffic (receiving) Warehousing and stores Incoming quality control

6. Material planning and programing Purchasing and outsourcing Cost reduction theovalue analysis Good vendor relationship Codification Standarization and evaluation of all products Transporation of material handling Inspect and quality control Elimination of losses

7. DEFINITION OF MATERIAL PLANNING Material planning is the scientific way of determining the requirements that goes into meeting production needs within the economic investment policies. - Gopalakrishnan & Sunderasan

8. Right quality Right quantity Right time Right place Right cost AIMS OF MATERIAL MANAGEMENT PLANNING

9. PURPOSE OF MATERIAL MANAGEMENT PLANNING To gain economy in purchasing. To satisfy the demand during period of replenishment . To carry reserve stock to avoid stock out. To stabilize fluctuations in consumption. To provide reasonable level of client services .

10. OBJECTIVES OF MATERIAL MANAGEMENT PLANNING PRIMARY OBJECTIVES Right price High turnover Low procurement and storage cost Continuity of supply Consistency in quality Good supplier relations SECONDAY OBJECTIVES Development of personnel Good information system Forecasting Inter-departmental harmony Product improvement Standardization Make or buy decision New materials and products Favourable reciprocal relationships

11. PRINCIPLES OF MATERIAL MANAGEMENT PLANNING Effective management and supervision depends on managerial function of POSDCORB. Sound purchasing methods. Skilful and hard poised negotiations. Effective purchase system. Simple Not increase other costs. Simple inventory control programme

12. Stock in hospital Injection or Medical store Linen store Genarel store

13. TECHNIQUES OF MATERIAL PLANNING Simple method Splitting the requirement in to basic components Suited to engineering industries Demand forecast Required for various material list with complete specification Based on past consumption data for future plan Statistical tool like mean, median, mode and standard deviation

14. ELEMENTS OF MATERIAL MANAGEMENT PLANNING ELEMENTS OF MATERIAL MANAGEMENT PLANNING Demand estimation surgical instrument, equipment and appliances Identified the needed items Based on ISI and other standards Calculate from the trends in consumption Review the past consumption Review with resource constraints Availability of funds Procurement process planning

15. Inventory Introduction : A stock of items held to meet future demand Inventory contain large and cost investment Inventory contain collection of goods processed from desired output to the organisation .

16. Definition of inventory Inventory is a stock to ensure uninterrupted supplies to have future economic value It provides cushion between the estimated and actual demand of materials Inveis a raw material or finished product are maintained primarily to bridge The gap between availability and demand .

17. Type of inventory

18. Official inventory : Medical and surgical items Dressings,linen,X - ray, Laboratory supplies House keeping item Processed sterile items Unofficial inventory: Dispensary,CSSD,laundry,opOPD services.

19. Function of inventory management Take advantage quantity discount Permit operation Hedge against price increase Take advantage order cycle Meet anticipated customer demand Smooth production requirements Decouple operation Protect against stock out

20. Element of surprise Easy detection of errors No interruption in production goods Act as a internal check Acccurate and upto date accounting records Investment material kept under control Availability of correct data Avoid stockout and shortage Importance of inventory

21. Inventory control Inventory control is the process of measuring and regulating inventory According to the pre determined criteria such as size of order,safe stock,mini level,maximum level,order level etc Inventory control minimize the total cost Inventory includes physical control of materials,presenting essential minimizing obsolescence damaged t.hrough safety disposal

22. Objectives of inventory control To supply materials on time To give maximum client , serv ice by meeting their requirements timely,effectively,smoo and satisfactory services.

23. Importance of inventory control To provide maintain excellent customer service it reduce uncertainty of procurement It fills gap between forecast and requirements of material

24. Functions of inventory control To carry adequate stock to avoid stock out To order sufficient quantity per order To make judicial selection of limiting the quantity of perishable items and costly items To ensure optimum level of inventory holding to minimise the inventory cost To provide safety stock

25. MANY SUPPLIERS STRATEGY & FEW SUPPLIERS STRATEGY FEW SUPPLIERS STRATEGY

26. CLASSIFICATION OF INVENTORY S.NO TYPES DESCRIPTION 1. Raw material inventories Raw material and semi-finished goods by another firm. 2. Finished goods inventories Stockroom waiting for dispatch. 3. In-process inventory (work in process) Semi-finished goods undergo the manufacturing process. 4. Indirect inventory (Components) Lubricants, spare parts etc., for proper maintenance and maintenance.

27. MAJOR ACTIVITIES OF INVENTORY CONTROL Planning Procurement Receiving and inspection Storing and issuing the inventories Recording the receipt and issuing of inventories Physical verification Follow up function Material standardization and substitution

28. SETTING UP OF VARIOUS STOCK LEVEL

29. OTHERS VARIOUS STOCK LEVEL Periodic cyclic system Depending on stock on hand and rate of consumption. Ordering interval is fixed but quantity to be ordered varies in each time. Two bin system One large bin - To meet the demand during interval between arrival of an order. Other bin - Used during the period of replenishment

30. Lead time: this is period required to obtain the supply once, need is determined average number of days between placing indent and receiving material administor lead time ;Purchase requisition obtaing quotation raising purchase order Suppliers lead time Time required for manufacture,packing forwarding,delay in transit.

31. INVENTORY CONTROL ADVANTAGES Delivery on time. Possibility for discount for bulk purchase. Handling of unforeseen circumstances to some extent. Workers and machinery need not be idle. DISADVANTAGES Working capital is tied up. More space is required. Increase in insurance charges & overhead expenses. Increase in charges for damage, pilferage, replacement, etc. Increase in charges for obsolescence.

32. SELECTIVE CONTROLS IN MATERIAL MANAGEMENT ABC Analysis (Always, Better, Control) VED Analysis (Vital, Essential, Desirable) FSN Analysis (Fast, Slow-moving & Non-moving) HMT Analysis (High, Medium, Low) XYZ Analysis (High-X, Low-Y, Z-Better) GOLF Analysis (Government, Ordinary, Local, Foreign) SOS Analysis (Seasonal off -Seasonal items) SDE Analysis ( scarce,difficult,easy item )

33. VED ANALYSIS VED analysis means vital, essential and desirable analysis The material s are classified based criticality that on functional basis. The degree of criticality can be stated as whether a material vital to the process,essential on desirable items . The stores when subjected to analysis based on their cricality can be classified as vital,essential,desirable item This analysis is termed as VED-analysis

34. “VED”-stocks can be different from hospital to hospital depending upon type and quantity of work load Average vital items -10% Average essential items-40% Average desirable items-50%

35. Purpose Manufacturing organisation thara are number of items which are very vital or critical in production Availability must ensure at all times for smooth production need to be strictly controlled Essential items follow vital item in hierarchia manner Desirable item are least importance It is possible to conduct two dimential analysis

36. Importance of VED analysis Organiation maitain optimum level of inventory Maintence of inventory cost and stock Bifurcate inventory into 3 parts ( vital,essential,desirable )

37. Control of VED analysis Category –I this are most important ones required controlled by administrative staff Eg:defibri llator Category-II These items are intermediate,importance (usual control by office incharge Category-III These item least importance,whi ch can be later,under control of store keeper.

38. ADVANTAGES OF VED ANALYSIS Useful for monitoring and control of stores and spares inventory by classifying them into 3 categories. Determine the critically of an item and its effect on production and other services. It is specially used for classification of spare parts items. It is useful in controlling and maintaining the stock of various types. COM PARISO N OF ABC AND VED ANALYSIS ‘V’ items ‘E’ items ‘D’ items ‘A’ items Constant control regular follow up Moderate stocks Nill stocks ‘B’ items Moderate stocks Moderate stocks Low stocks ‘C’ items High stocks Moderate stocks Very low stocks

39. “U” items (unnecessary items) It is not included in scientific session, in some public organisation which are static or inefficiently managed. There is peculiar category of “U” items,it can be grouped unnecessary These unnecessary items get purchased due to following reasons,

40. Thoughtless continuation of previous purchase Indifferent attitude towards hospital formulary Fear of change Poor supervision and control Unfair practices due to vested interest Vital items stocked in abundance Essential items stocked in medium amount Desirable items are stocked in small amount

41. Combination of ABC and VED analysis Mixed method(matrix module ) Cricality vs cost It is possible to conduct a two-dimensional analysis,taking into consideration cost on one hand,A,B,C ( always,bett,control ),and criticality on VED on other Finding of ABC and VED analysis can be coupled and further grouping can be done To a priority system of management and stores.

42. Combination of AED-VED method

43. Category –I need close monitoring and control Category-II moderate control Category-III no need for control

44. Cost system in VED analysis

45. Item cost: cost or price of inventory item it is the actual purchase of holding stock Ordering or set-up cost: The purchase of inventory involued certain cost,there may includetransportation charges,packing charges etc.

46. Holding cost : After purchase of inventory item,there are few cost too There may be related to storage,insurance charge of stock,labor cost,more over leakage,damagehe,pilferage of the in hand. Stock out cost Delay in production spare parts are getting stock out

47. Advantage of VED analysis It is useful for monitoring and control of stores and spares Derermine the criticality of an item and it’s effect on production It is specically used for classification of items such as vital,essential,desirable It is usually controlling of various stock Helps the managementto decide material policy To control the stock levels by inventory control.

48. Role of nurse manager in inventory system Inveory control is a scientific system nurse must know what to order, when to order, how much order, how much on stock So,purchasing,storing costare kept in possible Ovetseeing entire lifr cycle of inventory,inclu procurement,storage supplies,sales ,replenishment To enhances the quality of service

49. Efficient monitoring and controlling over the staff It promote communication between administrative staff,other health care team members.

50. Summary Till now we have discussed about material management and its importance inventory control purpose objectives fuctiofunction , specific inventory control method and VED analysis purpose importance mixed methods of analysis etc.

51. Conclusion Through this seminar have you all gained knowledge about inventory material management and various supplies in health care delivery system

52. SDE ANALYSIS

53. HML, XYZ, GOLF & SOS ANALYSIS

54. FSN ANALYSIS

55. INVENTORY MODEL FOR QUANTITY & INVENTORY REPLENISHMENT 

56. EOQ MODEL (Fixed Ordered Quantity) The stock reaches the reorder point. Order quantity is larger than a single period requirement so that ordering cost and holding cost balanced out. A = Demand for the year of an item in terms of Rupees S = Ordering costs in Rupees EOQ = √ 2AS/IU I = Carrying cost per Rupee per year expressed as decimal U = Unit cost of procuring item WEAKNESS: Erratic usage, faulty basic function, costly calculation ADVANTAGES: Easy to estimate inventory order Avoid expenditure which is not necessary The ordering consists - stationary, stock quantity, storage and receiving etc.

57. REORDER LIMIT METHOD (R) R = B+ SD (L+P/2) R = re-order point (in units) B = Safety stock (in units) SD = Average daily sales (units / day) L = Average Lead Time (in days) P = Review Time (in days) The average stock works out to: Safety stock + 1/2 of EOQ OPTIMUM REVIEW PERIOD: 288 x Cost per Order in Rs. Optimum Review Period = Annual Usage x Unit Cost (in Rs) x Annual Inventory Carrying Cost

58. PERIODIC ORDERING METHOD ( Review Period ) The stocks are received at fixed intervals of time. O rders are placed for a variable quality. M = Safety Stock + Consumption Rate (Lead time + Review Period) If lead time < Review period, Ordering quantity = M - Actual Stock held at the time of Review If lead time > Review period, Ordering quantity = M - (Actual Stock held at the time of Review + Quantity on o rder )

59. SAFETY STOCKS It is necessary in order to avoid ‘Safety Outs’ if the rate of consumption increased and or the lead time gets extended from the values considered for the replenishing systems. When consumption variation is high Safety Stock = (Maximum rate of consumption - Normal rate of consumption) x lead time When Lead time variation is very high Safety Stock = Normal consumption rate x (Maximum lead time - Normal Lead time)

60. INVENTORY ACCOUNTING SYSTEM

61. INVENTORY ACCOUNTING SYSTEM PERIODIC CYCLIC SYSTEM Periodic means at certain points in time. (once in a month, quarterly at beginning & end of the year does not have an accurate record of the inventories between these points) . Depending on stock on hand and rate of consumption . Ordering interval is fixed but the quantity to be ordered varies in each time.

62. PERPETUAL INVENTORY SYSTEM Perpetual means continuous & broad sense (stock taking as well as up to recording of stores books). Bin Card : Quantitative record of receipts, issues and balances of items in stores. Store Ledgers: It consists of a leaf card for easy removal and insertion and is useful for maintaining all costly items. Continuous Stock Taking: The items are selected by their utility and limited items are verified. Selected numbers of items are collected everyday and matched with the ledger book and bin card.

63. SYSTEM APPROACH THEORY Input Process Output (Raw material, labour , (Operations, m ethods , ( Goods, s ervice , Finance, information ) employee, management information ) activities ) ENVIRONMENT (Consumers , Competitors, Government, Suppliers) Ludwig von Bertalanffy (1968) - Introduced the system approach defines all systems are composed of three elements input , process and output which function in the environment. An organization as a system has input (human, physical resource), process (operation), and input (product, profitability) FEEDBACK

64. Different departments such as production, finance , procurement, marketing, etc. are the subsystems of an organization, and their collective yet coordinated efforts are necessary for efficient output for the system i.e organization

65. JOURNAL ARTICLES: Patel. H, Pitroda.J , Bhavsar . J.J.,(2015).A Review on Material Management through Inventory management.Journal of International Academic Research for multidisciplinary.2(12).ISSN:2320-5083 . This study results shows that use of ABC-VED matrix helped Al- zawra state company to control organize,manage its own inventory of raw material spare parts in more- efficient,by classifying it categories according to criteria of cost,crit ical Importance by focusing on first category giving more attention and care. Because it is high cost greater importance in organisation