MATERIAL MATERIAL MANAGEMENTMANAGEMENT

Neeraj Lal

Store @ Types:Store @ Types:

General Store Pharmacy Store

Main Store Sub Stores

General Store:General Store:

MissionMissionThe mission of the General Store The mission of the General Store Department is the acquisition of the Department is the acquisition of the right goods, in the right quantity, at right goods, in the right quantity, at the right place, from the right the right place, from the right supplier, at the right cost, with a supplier, at the right cost, with a minimum inventory and operating minimum inventory and operating investment, in order to service the investment, in order to service the needs of the Medical Center.needs of the Medical Center.

Core Tasks:Core Tasks:

Stores purchaseStores purchase Inventory Inventory

ControlControl Material Material

ManagementManagement

Terms Clarity:Terms Clarity: PURCHASE:PURCHASE: An act of obtaining an An act of obtaining an

article by making payments in terms of article by making payments in terms of money or its equivalent, to buy for a money or its equivalent, to buy for a price.price.

INVENTORY:INVENTORY: is itemized list of goods is itemized list of goods with their estimated worth, specifically with their estimated worth, specifically annual account of stock taken in any annual account of stock taken in any business.business.

CONTROL:CONTROL: An act of exercise, directing, An act of exercise, directing, guiding or retaining power over.guiding or retaining power over.

PURCHASE:PURCHASE: After forecasting demand and After forecasting demand and after verifying budgetary allocation, after verifying budgetary allocation, purchase is initiated.purchase is initiated.

The basic steps are as follows:The basic steps are as follows:

1)1) Preparing detailed specificationsPreparing detailed specifications

2)2) Inviting offers by (a) quotations (b) Inviting offers by (a) quotations (b) tenders (c) direct enquirytenders (c) direct enquiry

3)3) Preparation of tabulated comparative Preparation of tabulated comparative statement of the offers received.statement of the offers received.

4)4) Testing of samples/taking demonstrationTesting of samples/taking demonstration

5)5) Placing purchase order.Placing purchase order.

INVETORY:INVETORY:refers to the physical stocks of refers to the physical stocks of items which are kept idle in the store, but items which are kept idle in the store, but are essential for smooth functioning of the are essential for smooth functioning of the

hospital.hospital. Importance & Need:Importance & Need:1.1. To facilitate uninterrupted supplyTo facilitate uninterrupted supply2.2. To guard against the risk of To guard against the risk of

unpredictable changes in demandsunpredictable changes in demands3.3. To take advantage of price fluctuationsTo take advantage of price fluctuations4.4. To exercise effective control over a) To exercise effective control over a)

procurement b) holding c) distributionprocurement b) holding c) distribution5.5. Effective inventory management seeks Effective inventory management seeks

to determine optimal level of stores to determine optimal level of stores items.items.

Techniques for Inventory control:Techniques for Inventory control: ABC analysis:ABC analysis: (Always Better Control) (Always Better Control) - About 10% of the items take away the About 10% of the items take away the

budget allocation to the extent of 70% of budget allocation to the extent of 70% of the total allocation. These are grouped as the total allocation. These are grouped as ‘A’ category items.‘A’ category items.

- About 20% of items consume 20% of the About 20% of items consume 20% of the budget. These are grouped as ‘B’ budget. These are grouped as ‘B’ category items.category items.

- About 70% of the inventory which will About 70% of the inventory which will amount to only 10% of the total amount to only 10% of the total expenditure. These items are grouped as expenditure. These items are grouped as ‘C’ category items.‘C’ category items.

Cont….Cont….

ABC ANALYSISABC ANALYSIS

ITEMS QUANTITY % CONS. OF ITEMS QUANTITY % CONS. OF BUDGET ALLOCATION BUDGET ALLOCATION

A 10% 70%A 10% 70%

B 20% 20%B 20% 20%

C 70% 10%C 70% 10%

VED Analysis: VED Analysis: (Vital, Essentials & (Vital, Essentials & Desirable)Desirable)

- Vital:Vital: Items without which treatment Items without which treatment comes to standstill – i.e. non availability comes to standstill – i.e. non availability cant be tolerated.cant be tolerated.

- Essentials:Essentials: Items whose non availability Items whose non availability can be tolerated for 2-3 days, as similar can be tolerated for 2-3 days, as similar or alternative items are available.or alternative items are available.

- Desirable:Desirable: Items whose non availability Items whose non availability can be tolerated for a longer period.can be tolerated for a longer period.

Cont…Cont…

VED ANALYSISVED ANALYSIS Item PercentageItem Percentage

Vital 10%Vital 10%

Essential 40%Essential 40%

Desirable 50%Desirable 50%

Economic Order Quantity: (EOQ)Economic Order Quantity: (EOQ)

According to EOQ approach optimum level According to EOQ approach optimum level of investment in inventory is one where of investment in inventory is one where total cost of ordering cost and investment total cost of ordering cost and investment carrying cost will be minimum.carrying cost will be minimum.

EOQ = 2 AOEOQ = 2 AO

PIPI

A = Annual requirements in unitsA = Annual requirements in units

O = Ordering CostO = Ordering Cost

P = Price per unit P = Price per unit

I = Inventory carrying costI = Inventory carrying cost

Material Management:Material Management: Materials management for,Materials management for, General medical supplies General medical supplies Housekeeping and sanitary supplies Housekeeping and sanitary supplies Stationary and printing forms Stationary and printing forms Operating room supplies Operating room supplies Plant engineering, mechanical Plant engineering, mechanical

equipmentequipment

Materials management has 4 Materials management has 4 main components:main components:

1)1) Obtaining or Obtaining or acquiringacquiring

2)2) StorageStorage

3)3) DistributionDistribution

4)4) Exercising Exercising controlcontrol

Acquisition of materials can be Acquisition of materials can be done by following methods:done by following methods:

At departmental or sectional level – i.e. At departmental or sectional level – i.e. decentralizeddecentralized

At Hospital level – centralized purchaseAt Hospital level – centralized purchase By a group or chain of hospitals:By a group or chain of hospitals:a.a. Having same management control e.g.. Having same management control e.g..

Municipal or government hospital Municipal or government hospital b.b. Chain of corporate hospitals having common Chain of corporate hospitals having common

governing body e.g. Apollo hospitals, governing body e.g. Apollo hospitals, Wockhardt hospital etc.Wockhardt hospital etc.

c.c. Three or four hospitals situated in the same Three or four hospitals situated in the same city making joint, common purchase.city making joint, common purchase.

Personnel:Personnel:

Materials Manager or over all Materials Manager or over all

in-chargein-charge Store KeeperStore Keeper Store assistantsStore assistants HelpersHelpers Security personnelSecurity personnel

An overview of An overview of PHARMACY STORE:PHARMACY STORE:

Hospital Pharmacy store is the dept., Hospital Pharmacy store is the dept., service or a domain in the hospital service or a domain in the hospital organization managed under the direction organization managed under the direction of a professionally competent, legally of a professionally competent, legally qualified individuals.qualified individuals.

Pharmacy is an essential and extensively Pharmacy is an essential and extensively used facility. It caters to out patients, indoor used facility. It caters to out patients, indoor patients, other treatment areas like patients, other treatment areas like operation theatre, clinical laboratory etc.operation theatre, clinical laboratory etc.

pharmacy is efficiently organized to meet pharmacy is efficiently organized to meet patient medication needs and comply with patient medication needs and comply with applicable laws and regulations and control applicable laws and regulations and control medications through out the organization.medications through out the organization.

Objective:Objective: To ensure the To ensure the

availability of availability of right medication right medication at the right time, at the right time, the right dose, the right dose, at the minimum at the minimum possible cost in a possible cost in a proper manner.proper manner.

Activities of Pharmacy :Activities of Pharmacy :1.1. Procuring Pharmaceutical Items Procuring Pharmaceutical Items

• RequisitioningRequisitioning• PurchasingPurchasing• ReceivingReceiving• CheckingChecking• StoringStoring

2.2. Dispensing ItemsDispensing Items• PreparingPreparing• PackagingPackaging• LabelingLabeling• DispensingDispensing

3.3. Distribution of Items to different departments as per their Distribution of Items to different departments as per their requirements.requirements.

4.4. Quality control of drugs received by the hospital Quality control of drugs received by the hospital • Check on ArrivalCheck on Arrival• Periodic checkPeriodic check• Random checkRandom check• DispensingDispensing

Cont….Cont….

1.1. Implement policies and procedures Implement policies and procedures decided by the hospital to ensure rational decided by the hospital to ensure rational drug therapy.drug therapy.

2.2. Have up to date information of drugs, Have up to date information of drugs, which have been banned in India or other which have been banned in India or other countries.countries.

3.3. Maintain adequate stock of drugs as per Maintain adequate stock of drugs as per hospital formulary.hospital formulary.

4.4. Comply with rules and statutory Comply with rules and statutory requirements prescribed by food and requirements prescribed by food and drugs administration and also drugs and drugs administration and also drugs and cosmetic act. E.g. licensing, maintenance cosmetic act. E.g. licensing, maintenance of registers etc.of registers etc.

Set up of the Hospital PharmacySet up of the Hospital Pharmacy::

DEPT. OF PHARMACY

Hospital’s Clinical Staff

Hospital’s Nursing Staff

Hospital’s Other depts.

Patients

Hospital Administration

Hospital’s Committees

Location, Area & Facilities:Location, Area & Facilities: While finalizing the site for the pharmacy, While finalizing the site for the pharmacy,

following details are kept in mind.following details are kept in mind. Number and direction of flow of outpatients.Number and direction of flow of outpatients. Turn over of itemsTurn over of items Receipt and storage of raw material and Receipt and storage of raw material and

total output.total output. Lay out of the hospital-whether horizontally Lay out of the hospital-whether horizontally

spread or vertical.spread or vertical. Whether the pharmacy is manufacturing any Whether the pharmacy is manufacturing any

items like intravenous fluids, ointments etc.items like intravenous fluids, ointments etc.

Desirable Location:Desirable Location:o Should be close to out patient dept Should be close to out patient dept

because the pharmacy is used more by because the pharmacy is used more by out patients.out patients.

o To avoid criss – cross movements of To avoid criss – cross movements of patients, it is advisable to locate the patients, it is advisable to locate the pharmacy near exit gate.pharmacy near exit gate.

o For production activities a separate site For production activities a separate site may be needed and also needs to be may be needed and also needs to be clean, dust free and infection free.clean, dust free and infection free.

o Routine preparation of mixture, Routine preparation of mixture, compounds etc can be carried out in the compounds etc can be carried out in the main pharmacy.main pharmacy.

Area & Space:Area & Space:AREAAREA

- Total area required depends Total area required depends on the following:on the following:

o Policy of the hospital: a) If the Policy of the hospital: a) If the hospital patients need to be hospital patients need to be dispensed exclusively from dispensed exclusively from hospital pharmacy, sufficient hospital pharmacy, sufficient area is required. b) If the area is required. b) If the hospital gives prescription to hospital gives prescription to the patients, it may not be the patients, it may not be necessary for pharmacy to necessary for pharmacy to store slow moving used items store slow moving used items in large qty.in large qty.

o Storage area, number of Storage area, number of dispensing counters space for dispensing counters space for production unit depend on production unit depend on work load.work load.

SPACESPACEo Waiting areaWaiting areao Dispensing countersDispensing counterso Cash counterCash countero General storage space General storage space

for tablets, capsules, for tablets, capsules, injections, dressing injections, dressing materials etc.materials etc.

o Clod storage for Clod storage for temperature alike temperature alike productsproducts

o Administrative SpaceAdministrative Spaceo Space for production Space for production

unit as per FDA unit as per FDA guidelinesguidelines

o Space for receiving Space for receiving bulk items from bulk items from suppliers.suppliers.

Infrastructure & Facilities:Infrastructure & Facilities: Cold StorageCold Storage: Depending on the qty of items to be : Depending on the qty of items to be

stored at old temperature , should have stored at old temperature , should have refrigerator, deep freezers, air conditioned room refrigerator, deep freezers, air conditioned room etc.etc.

Temperature of this area must be regulated and Temperature of this area must be regulated and monitored as well.monitored as well.

Areas where power supply is likely to be Areas where power supply is likely to be interrupted, additional care is required.interrupted, additional care is required.

Shelves and stands:Shelves and stands: For storing item category For storing item category wise .e.g. liquids, tablets, capsules, wise .e.g. liquids, tablets, capsules, injectables ,surgical etc.injectables ,surgical etc.

Equipments for production unitEquipments for production unit.. Stands with counterStands with counter – for dispensing – for dispensing Routine furnitureRoutine furniture – like cupboard, chairs, tables etc. – like cupboard, chairs, tables etc. Fire safety precautions.Fire safety precautions.

Personnel:Personnel: Head pharmacist having qualification in Head pharmacist having qualification in

pharmacy. i.e. B.Pharm or M.Pharm pharmacy. i.e. B.Pharm or M.Pharm Pharmacists: trained pharmacists Pharmacists: trained pharmacists

having diploma in pharmacy are having diploma in pharmacy are required. One pharmacist for each 100 required. One pharmacist for each 100 beds and one senior pharmacist for beds and one senior pharmacist for every 5 pharmacists will take care of every 5 pharmacists will take care of the functions.the functions.

Servants for cleaning, transporting Servants for cleaning, transporting items etc.items etc.

Clerk or record keeper for maintaining Clerk or record keeper for maintaining important records.important records.

Quality & Safety assurance:Quality & Safety assurance: The individuals of pharmacy participate in clinical activities The individuals of pharmacy participate in clinical activities

relevant to the provision of drug therapy for the purpose of relevant to the provision of drug therapy for the purpose of optimizing patient care. optimizing patient care.

Activities may include but are not limited to; comprehensive Activities may include but are not limited to; comprehensive medication review and drug utilization reviews.medication review and drug utilization reviews.

The pharmacists participate in the review of medication The pharmacists participate in the review of medication related incidents like adverse drug reaction (ADR), related incidents like adverse drug reaction (ADR), medication error and provide recommendations to prevent medication error and provide recommendations to prevent recurrence recurrence

The pharmacist contribute in “Pharmacy & therapeutic The pharmacist contribute in “Pharmacy & therapeutic committee” which evaluates the clinical use of drugs, committee” which evaluates the clinical use of drugs, develops policies for managing drug use and drug develops policies for managing drug use and drug administration, and manages the hospital formulary system.administration, and manages the hospital formulary system.

Clinical pharmacists identify important clinical indicators and Clinical pharmacists identify important clinical indicators and apply appropriate monitoring techniques.apply appropriate monitoring techniques.

Synchronize in the quality improvement and patient safety Synchronize in the quality improvement and patient safety program in the organization.program in the organization.

Computerized software for material Computerized software for material management:management:

Salient Features/ Modules:Salient Features/ Modules: Quotation Quotation Purchase order Purchase order Online approval, Online approval, Pharmacy drug Pharmacy drug

configuration configuration Pharmacy stores Pharmacy stores

configuration configuration Drug issue to patients and Drug issue to patients and

billing billing Unit dosage facility Unit dosage facility Supplier information Supplier information Maintenance of drug Maintenance of drug

inventory inventory Automatic reorder level Automatic reorder level

setting setting Purchase Requisitions Purchase Requisitions

Purchase Order Purchase Order Online request for stock Online request for stock

from various sub-stores from various sub-stores Online stock transfer Online stock transfer Maintenance of stock at Maintenance of stock at

different sub-stores different sub-stores Return of items nearing Return of items nearing

expiry expiry Destruction of expired Destruction of expired

items items Physical stock verification Physical stock verification

and adjustment and adjustment Goods receipt Goods receipt Stock Transfer (inter store Stock Transfer (inter store

stock transfer) stock transfer) Stock Adjustment Stock Adjustment Stock in Hand reports Stock in Hand reports

Thank YouThank You