Inventory Management: The workshop

Transcription

1 Inventory Management: The workshop Youssef N. Akiki PharmD, PharmMBA, DBA candidate OPL CE for Hospital Pharmacists March 4, 2017

2 Inventory Management Goal

3 Hospital Pharmacist and main tasks Drug inventory management (Purchasing, Expiry, Storage, follow up...) Dispensing In-hospital preparation, Aseptic mixture and adjustment of injections, Drug information service, Many clinical services including therapeutic drug monitoring, clinical research coordination..

4 How percentage of your daily work hours, are you spending for inventory management (inventory, purchasing, return, policies...)? 18% 24% 58% Less than 30% Between 31~60% More than 60% Answered by 38 Lebanese Hospital Pharmacists

5 Did you ever participate in an inventory management course only during your BS or PharmD program? 35 84% Yes No % 0

6 Inventory Management Challenges in A Hospital Complicated and specific patient needs Security Inventory Management Challenges in a Hospital Setting Fluctuations Temperatureand Agesensitive Items Don Amato: Hospital Inventory Management: 4 of the Biggest Challenges, Medical Management Services, July 2014.

7 Trends

8 FIRST ROBOTIC PHARMACY IN DUBAI JANUARY 2017, EL RACHID HOSPITAL

9 FIRST ROBOTIC PHARMACY IN DUBAI JANUARY 2017 The robot can manage up to 35,000 medicines and dispense around 12 prescriptions in less than a minute The patient waiting time will be cut by 90 per cent and also reduce human error. Pharmacists simply need to store medicines in the robot s vault before the machine sorts out the medicines according to the near date of expiry and arranges them in specific shelves.

10 Automation in hospital Pharmacy Multiple responsibilities for hospital pharmacists. Artima: A Japanese application for inventory management (2004) University hospital: 17 clinical departments with 602 beds.

11 Automation in hospital Pharmacy Business Time required DMS 1995 Time required Artima Making a supply list for each pharmacy section Making a purchase order list Purchase order processing Making a turnover list in the drug storage room 5 Printing out a purchase-order list to each wholesale store (by fax) 6 Data management of drugs purchased and delivered Total time 90 14

12 Technology in inventory management Bar coding and point of sale scanners (POS) Automated dispensing systems RFID (radio frequency identification) Online applications to report and monitor the inventory Software with automatic replenishment that moves more to JIT

13 Types of costs in inventory models Ordering (procurement) cost: paper work, truck driver Unit purchasing cost: for each additional unit purchased often referred as variable cost Holding (carrying) cost: inventory on hand, cost of renting warehouse space, insurance spoilage Shortage (penalty): it could be measure as a service level such as meeting 95% of the demand on time-diff between shortage in community and hospital

14 Exercise 1 Inventory Turn Over Rate (ITOR)

15 Inventory Turn Over Rate (ITOR) ITOR= Cost of Goods Sold/Average Stock Average cost= (beginning Inventory Account Balance +Ending Inventory Account Balance)/2

16 What is the ITOR for 2016 in a small hospital? Annual cost of goods sold during 2016: 1,560,000 $ Beginning Inventory Account Balance in 2016: 120,000 $ Ending Inventory Account Balance in 2016: 130,000$

17 ITOR? A- 15 B-10 C-12.5

18 ITOR analysis In a community Pharmacy, ITOR=12 In a small hospital ITOR=8 to 10 (in a large one ITOR=12 to 18 turns per year) Shrinkage= increase in Average stock without increase of cost of goods sold

19 Exercise 2 Inventory classification

20 Pareto s law The principle states that 20% of the invested input is responsible for 80% of the results obtained Pareto s law: 80% of the value of the inventory is composed of 20%of the actual items. Focus on the 20% for better results (better offers, better inventory mngt )

21 According to Pareto s law, which items count for 80% of the total expenditure? item total cost (QT*cost) during a year A 110, B 100, C 90, D 80, F 60, G 40, H 25, I 10, J 7, K 5, L 3, M 2, N 1, O P Q R S ,150.00

22 ABC analysis Same method as Pareto but the % are more elaborated. Class A: 20% of the inventory items accounting for 70% of the annual drug expenditure Class B: 30% of inventory items accounting for 20% of the annual drug expenditure Class C: 50% of the inventory items accounting for 10% of the annual drug expenditure

23 Exercise 3: According to ABC s law, which items count for C Class? item total cost (QT*cost) during a year A 110, B 100, C 90, D 80, F 60, G 40, H 25, I 10, J 7, K 5, L 3, M 2, N 1, O P Q R S ,150.00

24 VED analysis V: Vital E: Essential D: Desirable

25 ABC_VED analysis Coupling method (Devani et al. 2010) A B C V AV BV CV E AE BE CE D AD BD CD

26 Exercise 4:How do you classify these medications with VED analysis: Anti tetanos Ig Paracétamol injectable Esomeprazole IV Albumin DPP-4 inhibitors Flumazenil

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28 Safety stock Safety Stock = (Max daily (or weekly or even monthly) Consumption- Average daily (or weekly or even monthly consumption)* Lead time Lead time: time required to obtain product from vendor once ordered

29 Safety stock It depends on many factors: The cost of item Anticipated fluctuations The return policy for the item Warehouse storage capacity The manager s risk tolerance

30 Exercise 5: Calculate the SS Max Weekly cons. Of Omeprazole= 200 Average weekly Cons.= 120 Lead Time: 2 days SS=?? A-160 B-240 C-150

31 Reorder point The reorder point is the inventory level at which it is appropriate to replenish stock. The calculation is as follows: =(Lead Time + Review time)*(daily, weekly or monthly Average Consumption)+ Safety Stock review time: time between shelf or report review and the order (typically one day)

32 Exercise 6: Calculate the reorder point for omeprazole Max Weekly cons. Of Omeprazole= 200 Average weekly Cons.= 120 Lead Time: 2 days Review time= 1 day Answer: A-530 B-520 C-540

33 Minimum stock level Minimum stock level (Smin)= (Lead time*average consumption)+safety stock

34 Exercise 7: Calculate the minimum quantity Minimum quantity= A-300 B-400 C-500 D-None

35 Maximum stock level Maximum stock (Smax) = Smin+(procurement period*average consumption) PP= time until the next order will be placed

36 Exercise 8: Calculate the maximum quantity if PP=10 days Maximum quantity= A-2600 B-1600 C-600

37 Order Quantity (Q 0 ) Q 0 = (Smax+ S B )- (S 1 -S 0 ) S B: Stock back-ordered S 1 : Stock on hand S 0: Stock on order Optimal quantity: (Smax+Smin)/2

38 Q= A-1080 B-1188 C-1000 Exercise 9: Calculate the Order Quantity if we have on hand 520

39 Right Price Fixed prices 3 types of discounts: Quantity discount Cash discount Product bundling

40 Economic order quantity (EOQ)

41 Economic order quantity (EOQ) EOQ= 2DP/CI D:annual demand (unit) P:procurment cost per order ($) C:unit cost to the business ($) I:inventory carrying cost (%of the investment in stock)

42 Exercise 10 EOQ= 2DP/CI Example: D: Annually demand for Medication A=54 C (unit cost)=150$/unit I (inventory carrying cost)=25% estimated (tax, insurance, other risks) P=10$(procurement cost: employee time, expense per order) EOQ= 2(54)(10)/(150)(0.25) =5.4 The optimal quantity of product per order is 5.4 or 5 bottles for 11months

43 Conclusion SS, RP, Max and Min, EOQ, ITOR Pareto, ABC, VED analysis Tools for KPI

44 What is next??? Forecasting Negotiation techniques Finance: understanding the numbers Leading and managing change Strategic planning to achieve results Budgeting and setting financial priorities Marketing and promotion for projects..

45 Thank you