Effective inventory management dr.s.c.shetty

1. EFFECTIVE INVENTORY MANAGEMENT
IN EYE HOSPITAL
National Sight First Conclave, Siliguri
October, 06 - 07, 2018
Lion. Dr. S. Chandrashekar Shetty, Pmjf
Chief Sight First Technical Advisor
India & Sri Lanka
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2. “Inventories are stockpiles of raw materials, supplies, components, work in process and
finished goods that appear at numerous points throughout a firm’s production and
logistics channel” (Ballou, 1998).
“An Inventory is a document that lists all the items in stock that are required for the
efficient functioning of the Eye Hospital”
“Inventory management is a set of techniques and methods employed to assure in each
moment, in the Best Economic conditions, the conservation of the materials availability
for the user” (Lebas, 1961).
“Supply Chain Management is the integration of all activities in association with the
flow and transformation of goods from raw materials up to final user, as well as all the
information flows, through improved supply chain relationships, in order to achieve a
sustainable competitive advantage.” (Ballou, 2004),
INTRODUCTION
Effective Inventory Management in Eye Hospital
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3. Effective Inventory Management in Eye Hospital
Equipment, Instruments and Supplies:
High Quality, large volume clinical work can be done when Good Quality
Diagnostic Equipment, Surgical Instruments, Clinical & Administrative Supplies
are available in the required quantities at the required times
High Quality Large Volume Sustainability
• Good Quality Products
available when required,
purchased from reliable
Vendors
• Calibration
• Good Maintenance
• Spare Parts Planning
• Number and Balance
• Group Purchasing
• Inventory Management
• Models easy to Repair
and Service
• Appropriate Technology
INTRODUCTION03

4. The following Five Steps can be applied to improve utilization of
Equipment, Instruments and Supplies:
Step 1: Review the stock of Equipment, Instruments & Supplies
Step 2: Ensure a balance between the various Resources
Step 3: Ensure proper Utilization of Resources
Step 4: Periodically review the Quality of Resources
Step 5: Spares Planning
Effective Inventory Management in Eye Hospital
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5. Effective Inventory Management in Eye Hospital
Inventory Control is defined as the supervision of Supply, Storage & Accessibility of items in
order to ensure an adequate supply without oversupply.
The objective of Inventory Management is to have the appropriate quantity of materials in
the Right Place, at the Right Time and at Low Cost.
Strike Best Balance Between “too much and too little”
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6. Need for Inventory Control
• Inventories constitute the most significant part of the current assets,
representing as much as 60%-80% of the Capital Investment. Therefore, it is
absolutely imperative to Manage Inventories Effectively and Efficiently in
order to avoid unnecessary investments.
• If the Hospital’s inventory level is too low, it risks delays in fulfilling efficient
service delivery.
If the inventory level is too high, it is using up money that can be better used
in other areas. It also risks obsolescence & spoilage.
• In a Hospital, about one-third of the Annual Expenses spent on buying
Medicines / Supplies. To minimize the inventory investment, the Hospital may
keep the inventory low without compromising with Efficient Service Delivery.
Effective Inventory Management in Eye Hospital
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7. ABC Analysis:
ABC analysis is based on Pareto principle (80-20 rule) which states that 80% of
the overall consumption value (expense) is based only on 20% of the total items. i.e.
small portion of the items may typically represent the bulk of money value, while a
relatively large number of items may form a small part of the money value.
ABC analysis is a method for dividing on-hand Inventory into three classifications A, B, C
based on annual consumption unit.
Effective Inventory Management in Eye Hospital
‘A’ items : money value is highest 70%, represent only 10% of items
‘B’ items : money value is medium 20%, represent about 20% of items
‘C’ items : money value is lowest 10%, represent about 70% of items
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8. Effective Inventory Management in Eye Hospital
ABC Analysis for prioritization of items which require
Efficient Controlling Techniques for Effective Inventory Management
ABC analysis Annual Consumption Value (%) Total Inventory Items (%)
A - items 70-80 10-20
B - items 15-25 30-40
C - items 05 50
Management policies for ABC Categorization:
• Managing all the Inventories in Hospital will take personal time and costs
money.
• ABC classification shows that not all the Inventories need to be controlled with
equal attention.
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9. Effective Inventory Management in Eye Hospital
Layout of Hospital’s Central Warehouse
Shelves and Racks can help organize inventory
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10. Effective Inventory Management in Eye Hospital
Advantages Disadvantages
1. Selective Control over such items
which are having sizable investment
Considers only money value of items
and neglects the importance of items for
the Service Delivery process2. Helps to point out obsolete Stocks
easily
3. Provides Sound basis for allocation of
funds and HR
It does not categorize the items based on
their critical needs, hence, sometimes the
purpose of ABC categorization may be
defeated.
4. Enables the maintenance of high
Inventory turn over rate
Advantages and Disadvantages of ABC Analysis:
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11. VED Analysis: VED ( V-Vital, E-Essential, D-Desirable)
Classification is based on the Criticality of the Inventories, in contrast to
ABC classification which is based on Consumption Value.
 Vital (V): The Medicines / Supplies critically needed for service delivery, must be
available in the Hospital all the times.
 Essential (E): Medicines / Supplies lower critically needed, which may be available in
the Hospital.
 Desirable (D): The remaining Medicines / Supplies lowest critically needed, the
absence of which will not be detrimental to Service Delivery.
Effective Inventory Management in Eye Hospital
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12. “Key Take Home Messages”
 Monitoring stock usage by keeping accurate records to predict future usage and
plan orders
 Standardization of stocked items is desirable to reduce cost and improve quality
 Optimal Stock Management to ensure uninterrupted services
 Better to make big orders, less frequently for cost effectiveness
 Effective Negotiation with vendors based upon projected Annual Service Delivery
to obtain maximum discount on supplies
 Investing in Effective Inventory Management Systems ensure Efficient Service
Delivery
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13. Acknowledgements & References:
• Management Principles and Practices, for High Quality, Large Volume, Sustainable Cataract
Surgery Programmes, Aravind Eye Hospitals & Postgraduate Institute of Ophthalmology,
Lions Aravind Institute of Community Ophthalmology and Seva Foundation.
• Techniques of Inventory Control, Module 5: Chapter 3, PGCHSM - 2013, Indian Association
of Preventive and Social Medicine, Gujrat Chapter.
• Inventory Management for the Health Sector, ABC Analysis, Approach Joana Isabel Baptista
Nabais.
• Managing your Eye Unit’s Supplies, Community Eye Health Journal, Vol. 24, Issue 76,
December 2011. By R.D. Thulasiraj, ED, LAICO, Madurai
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14. Thank
You