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Inventory Management Best Practice Tips
Managing inventory may not earn the second glance it typically needs to supply clinicians effectively and efficiently. So Healthcare Purchasing News asked a variety of experts for sure-fire tips to satisfy their clinical customers and to contribute to high-quality healthcare delivery. Here’s what they shared.
When working with an outside inventory-counting company, hospital personnel can take general steps in advance of the physical on-site count to ensure an accurate, timely inventory job is conducted - such as:
- Specify which hospital areas are to be counted and prepare them accordingly
- Ensure supplies are marked correctly
- Identify any supplies that should not be included in the count
- Avoid receiving large supply shipments immediately before the start of an on-site count
- Assign specific hospital personnel to act as liaisons with the inventory company during the inventory process
- Ensure training is available if the inventory process involves equipment or procedures that are unique to your hospital
Depending on the type of inventory count being conducted, specific preparations by hospital employees will vary. For example:
For Count Sheet or Hand List, inventories:
- Add location identifiers to each inventory sheet
- Confirm that the description and size details and the item numbers on the count sheets are up-to-date
- Include manufacturer names on the count sheets - although this isn’t imperative to the counting process, it can prove helpful in obtaining an accurate inventory count
For comprehensive inventory counts:
- Ensure hospital liaisons are immediately available to answer questions
- Have internal quality control teams present at the start of the job to avoid tally discrepancies
For hand-held scanner counts:
- Confirm the equipment is located in the areas to be counted
- Ensure hospital personnel are properly trained and immediately available to upload the data from the scanners upon the completion of the count
By taking a few extra steps prior to the actual on-site count, management can help to facilitate an efficient inventory count and to help minimize the disruption to the daily routines of the hospital.
Saraheta Bennett, Vice President, KMED Logistics, St. Claire Shores, MI
- Think outside the box. Don’t always do what has always been done. New ideas and vendors can offer novel ways for reducing inventory costs.
- Reward front-line personnel. Through recognition, notes and or performance evaluations, front-line personnel will get more involved if there is a "What’s in it for me?" [opportunity] other than [just being] part of their job.
- Network ideas/Seek input. Use associations (e.g., AHRMM, etc.) and LinkedIn networks for sharing new ideas. Ask your front-line department members in high-cost inventory departments for ideas that could easily address challenges. Remember the story of the hotel maid that saved a corporation millions. Hotels were getting ready to add new elevators due to complaints regarding slow speeds. A maid recommended placing mirrors outside elevator entrances so people were distracted with something to look at while waiting. Complaints regarding slow moving elevators disappeared.
- Details, details, details. Never assume people know what is needed. Make sure key steps and inventory dates (annual physical inventory, JCAHO dates, etc.) are clearly communicated well in advance.
- Use the K.I.S. Theory - Keep it Simple. If there are so many steps your inventory manual competes with Obamacare for size, expect people not to have read or understand what is required.
Mike Lajeunesse, Vice President, Sales and Operations, Medical Materials Inc. , Boynton Beach, FL
Some of these may be obvious to some. However, I am continually surprised at the simple ones that get overlooked.
- Product utilization must be reviewed at least quarterly and PAR levels adjusted on a routine basis to maintain adequate inventory control.
- Always consult with the users in a particular department before making changes or adjustments to the inventory management process or par levels in their area.
- Inventory in the clinical departments is where the dollars are, and it cannot be left to clinical departments to manage. It must be managed by the supply chain.
- As more and more manufacturers place expiration dates on products, it is essential to establish effective controls to manage these products to reduce the occurrence of products being discarded
- Supply chain does not have to control all inventories in a facility. However, they must be involved in the management of the inventories outside of the warehouse and nursing station locations.
Mike Neely, Senior Vice President, Supply Chain Operations, The Optimé Group, Buford, GA
- Invest in cleaning data and establish data standards that should not to be compromised.
- Invest in the necessary interfaces to export a common materials management information system (MMIS) item file. Be sure to upload to all inventory applications, at least daily, to maintain data synchronicity.
- Utilize bar-code scanners whenever possible. If a package contains a bar code, it should be used to record receipt, use, etc.
- Invest in a strong preference card management process to include unused product returns.
- Continuously evaluate the merits of third-party inventory management services. Business models are continuously being launched and fine tuned and what seems impractical last year may make more sense today.
Thad MacKrell, Vice President, Commercial Technology Group, Owens & Minor Inc. , Mechanicsburg, VA
- Plan for exceptions to minimize the resource needed to react to them. Build how to handle exceptions and emergencies into standard procedures so that there is no lost time to respond.
- There can be several units of measure used, that differ depending on which part of the organization is operational (cases in the primary inventory location, boxes on a PAR cart, eaches at point of care.) Implement an operation that eliminates unit-of-measure confusion during receiving/picking operations — using system capabilities, physical segregation or highly visible graphics aides (on screen, on labels, on rack, etc). This will also need to be taken into consideration with the various data interface points, re-ordering, patient billing, etc.
- Systems and processes need some level of flexibility. "Grab and go" inventory use can be minimized, but rarely eliminated. To that end, address the process for automated replenishments to include built-in support for imperfect usage practices.
- Create global visibility of current inventory at all use points whether expensed on delivery or not. There are several upsides to this business practice. Operationally it provides the information needed to accurately auto-replenish; clinically it enables fast action to find alternate inventory sources (e.g., nearby PAR locations); financially it enables you to know where everything is at all times and provides data for metrics and KPIs.
- Human resources are key to success. We have seen very successful operations that have combined outside experts in supply chain with strong internal staff to create a supply chain best practice with a very patient-centric culture.
Nancy Pakieser, Director, Product Marketing - Healthcare, TECSYS Inc.
- Proactive collaboration and communication, both upstream and downstream, about changes.
- Alignment and sharing of information about changes in demand for existing items, new items and known changes. This may be driven by the addition of new patients, new clinical focus or expansion of stores, for example.
- Alignment and sharing of information about alternatives that will be used in the event of supply disruptions. Ideally this level of sharing starts with those closest to the patients and is translated accurately to the manufacturers of product.
- Consistent, dynamic allocation process. Allocation processes ensure fair allocation when disruptions occur and minimize practices that could result in issues with availability.
- Leveraging advanced analytics to improve service. Use advanced analytics to predict supply chain changes and initiate proactive actions.
- Clear, consistent metrics about performance. Partners have and share clear, consistent metrics to measure and improve performance between organizations. For example, the Economic Order Quantity model can be applied to help acute and ambulatory sites of care determine how they should be purchasing in order to optimize spend and inventory levels. The model helps supply chain partners understand the cost involved with picking, shipping and warehousing and apply basic math to make necessary adjustments.
Andy Keller, Vice President, Inventory Management, Cardinal Health Inc., Dublin, OH
Visibility across the supply chain.
This starts with the understanding of basic physical characteristics such as "eaches," boxes and pallets and basic principles such as understanding lead time between partners or ensuring that the right ordering factors are in the system so partners can work to ensure that they have the right systems, structure and focus to keep the supply chain running optimally.
This includes the notion of providing accurate information about availability, in-transit information between partners both upstream and downstream, and disruptions, such as when the product will be back in stock and reasons for the disruption.
If they demonstrate that inventory practices are not optimal, consider adjustments such as low-unit-of-measure orders/delivery that can remove touch points in the supply chain, or par optimization, which examines cost and frequency of deliveries to help determine if order patterns or levels should be altered.
James Bach, Vice President, Inventory Management, Cardinal Health Inc., Dublin, OH