Logistics and materials management are crucial functions in healthcare supply chain management. Logistics involves planning and controlling the flow of goods and information from origin to point of use. Materials management encompasses planning and controlling functions related to procurement, storage, and distribution of medical supplies. Efficient logistics and materials management are important for hospitals to ensure the right medical products are delivered to patients in a cost-effective and timely manner while maintaining quality of care.
2. LOGISTICS
MANAGEMENT
Logistics is the management of the flow
of goods, information and other resources
between the point of origin and the point of
consumption in order to meet the requirements of
consumers.
Logistics involves the integration of information,
transportation, inventory, warehousing, material
handling, and packaging, and
occasionally security.
Logistics is a channel of the supply chain which adds
the value of time and place utility.
3. Logistics Management
Logistics management is that part of
the supply chain which plans,
implements and controls the efficient,
effective forward and reverse flow and
storage of goods, services and related
information between the point of origin
and the point of consumption in order
to meet customer and legal
requirements.
4. Supply Chain Management
It is a chain of interconnected
businesses and business processes.
Every time a requirement is
communicated, order is placed and
inventory is stocked, there is a
potential opportunity of value
addition, waste
reduction and process
standardization.
5. Logistics Management in
Hospital Supply Chain:
Medicinal supplies have a limited shelf
life and many drugs are expensive.
This call for a specific method of
provisioning, storing and
administering
such medicines which starts with
storing them in a temperature/
humidity controlled
atmosphere and issued on a First
Come First Served (FIFO) order.
6. MATERIALS
MANAGEMENT
Planning and control of
the functions supporting the
complete cycle (flow) of materials, and
the associated flow of information
These functions include
(1) identification, (2) cataloging,
(3) standardization, (4) need determination,
(5)scheduling, (6) procurement, (7) inspection,
(8) quality control, (9) packaging, (10) storage,
(11) inventory control, (12) distribution, and
(13) disposal
7. Objectives of MM
Material selection Low operating costs
Receiving material safely & in good
condition Issue material upon receipt of
appropriate authority Identification of
surplus stocks & taking appropriate
measures to reduce it.
Providing economy in purchasing &
minimizing waste
To purchase items of best quality at the
most competitive prices.
9. MM Functions
Material planning and programming
Purchasing and outsourcing
Inventory control
Storekeeping and warehousing
Codification
Standardization and evaluation of all products
Transportation and material handling
Inspection and quality control
Cost reduction through value analysis
Disposal of surplus / obsolete material
Distribution
10. Basic Principles of MM
Right quality,
Right quantity,
Right prices,
Right source and at
Right time to the
Right place
Centralize the purchase system
Back up of good systems
management
11. Mat Purchase & Planning
Processing the requisition:
communicate to the purchase dept.
the requirements for various items by
requisition form which contains the
details of quality & other necessary
info. about items & is to be signed by
competent authority.
Proper Specification
12. Inventory Management
Inventory means stock of raw
material, semi finished &
finished goods maintained by
organization
Inventory control-the tool of
maintaining the size of inventory
at some desired level keeping in
view the best economic interest
of org.
13. Objectives of Inv Control
Protection against fluctuation in
demand
Better use of 5 M’s Protection against
fluctuation in output
Control of stock volume
Protecting against quality problems
To ensure reliable delivery to
customers
Reducing input costs (purchase in
advance of price increases)
14. Inventory Costs
Costs associated with ordering too much (represented
by carrying costs) Costs associated with ordering too
little (represented by ordering costs) These costs are
opposing costs, i.e., as one increases the other
decreases The sum of the two costs is the total
stocking cost (TSC)
Carrying (or holding) costs: sum of all costs that are
proportional to the amount of inventory physically on
hand at any point in time
Cost of capital (opportunity cost) Breakage, spoilage,
deterioration, obsolescence, loss, insurance etc.
Physical storage, handling, book-keeping,
refrigeration, utility etc.
15. Inventory Costs
Ordering cost: Sum of all costs related to the
amount of inventory that is ordered for
replenishment.
Fixed cost: incurred independently of the size of
the order as long as it is not zero, e.g. book-
keeping and paper work, mailing, etc., associated
with the order
Variable cost: incurred on a per unit basis
Penalty cost (or stockout or shortage costs): cost
of not having sufficient stock on hand to meet
demand when it occurs
16. Inventory Decisions
ABC (ALWAYS BETTER CONTROL)
analysis- Class A –constitutes 10% of
total items & accounts for 75% of total
money spend on inventories. Class B –
constitutes 15% of total items & accounts
for 15% of total money spend on
inventories
Class C - constitutes 75% of total items &
accounts for 10% of total money spend on
inventories
17. VED Analysis
This analysis represents the classification of
items based on the criticality.
The analysis classifies the items in 3 groups
called vital, essential & desirable.
Vital items are those items the unavailability of
which will stop the production
Essential items are those items whose stock
out costs are very high.
Desirable items will not cause any immediate
production stoppage & their stock out costs
are nominal
18. Buffer Stock
Buffer stock The min. level of inventory to
cover some unforeseen & uncalled for
situations is called safety or buffer stock
Factors affecting choice of buffer stocks-
Uncertainty in demand
Uncertainty in lead time
Size of batch Larger the uncertainty
associated with any factor, larger should
be the buffer stock.
19. Finding the Right Source
Supplies catalogue
Print media :Trade directories, trade
journals , news papers, yellow
pages
Salespersons: many advantages
Trade exhibition , fairs , conferences
Colleagues in similar field
Internet
20. Negotiations
Possible because of huge margins
Pass on to patients
Not at the cost of quality
Win-win situation for all
Maintain relationship
Not to purchase on listed price
Negotiate bulk price
Always ask for discount
Price protection
Credit
21. Receiving
Establish written protocols, assign
responsibility
Checking of goods for quality, expiry etc
Cross check with purchase order &
invoice / delivery chalan
Proper record in designed registers
Signature of receiver & delivery person
Periodic checks
22. Distribution
From store to user
An intricate process
Right item at right time at right
place
2 methods:
Requisition: as and when
required
Par level: periodic replenishing to
a certain fixed level
23. Scope of MM
Every health care organization requires a
continuous stream of material and supplies
for providing quality care to patient.
There are numerous individual items of
materials required for running a hospital,
larger the size of the hospital, greater the
number of items required
The efficiency of a hospital partly consists
in maximizing the quantity of patient care
per unit of cost while maintaining
satisfactory levels of quality and consumer
satisfaction
24. Purchasing
Purchasing is one of the important
functions of administration and the goals
of purchasing are to purchase at a right
price, right quality, right quantity, right
contractual terms, right time, right source,
right material, right place, right mode of
transportation, right attitude, with
techniques such as value analysis,
material intelligence, purchase
research, SWOT analysis, purchase
25.
26.
27. Procurement
Procurement of the material depends on
prioritization of purchase of material
fixing the price
calling for tenders/quotations
evaluation of the tenders/quotations
placement of orders
ensuring receipt of material
making the payment.
28. Negotiation
Procurement by negotiation is a battle of wits and
art of embodying sophisticated tactics and
maneuvers by both the buyer and the suppliers.
It is an art of arriving at common understanding
through bargaining on the essential points for the
contract such as delivery, specification, price and
payment terms, etc.
It is a difficult art and requires the exercise of
executive judgment, tact and commonsense and
the bargaining power will definitely be influenced
by the preparedness of the buyer as well as the
place and time of negotiation.
29. Status of Supplies
Carrying the discussion about the volume
and cost of medicines used in a typical
hospital scenario, we can safely
recommend:
“Class – A” status to the critical/life
saving drugs.
“Class – B” status to the important drugs
that are used by different departments.
“Class – C” status to the routine drugs
and medical supplies
30. Automation
A fully automated medication
administering process provides tools
and guidance that
assist in ensuring the “Five Rights” of
prescribing and administering a
medicine:
✔Right Drug
✔Right Dose
✔Right Patient
✔Right Route
✔Right Tim
31. Benchmarking the hospital logistics
process
Improved operations should provide better
cost control, while maintaining the quality
of care delivered to the public.
Support processes are excellent targets
because they don't necessarily have a
direct impact on the quality of care
provided.
Hospital logistics is one such process, the
goal of which is to efficiently deliver
medical supplies and pharmaceutical
products to the final consumer, the patient