material management.ppt

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  • 1Reduction in inventory levels and product waste, expiry and obsolescence2More efficient means of order entry and processing, with integrated electronic settlement3Supply chain transparency, shipment tracking and improved demand forecasting4Volume pricing and discounts5Accurate and timely management reporting, especially related to patient/procedure costing

  • Supply Chain Management (SCM) is the process of planning, implementing and controlling the operations of the supply chain with the purpose of satisfying the customer requirements as efficiently as possible with a continuous eye on operating cost reduction

    The keeper of the supply chain has two main objectives. The first is making sure the product is always available when it is needed. The second is to ensure the first objective is fulfilled in the most cost effective way

  • The ultimate aim is to transform a sick patient to a healthy person at a reasonable cost, in the shortest possible time and with superior patient satisfactionConsolidation of demands from all the departments and proper flow of information between the departments and suppliers can remove a lot of bottlenecks and result in reduced cost of all the parties involvedHigh volume drugs like antibiotics and anti-ulcer drugs constitute more than 70% of the total drug consumption in a typical hospital. Expensive, restricted drugs account for a mere 5% of general usage. This suggests that a proper inventory control mechanism and order placing procedure can be brought in place for these high volume drugs

  • It is estimated that inventory management accounts for anywhere between 17% and 35% of a hospitals total revenueTherefore, a small reduction in inventory management expenses can have an enormous impact on the hospitals bottom-lineFor example, a hospital running at 5% profitability, with 30% inventory management costs could improve profitability by 60% with a 10% reduction in its inventory costs

  • Class A : Status to the critical/life saving drugsClass-B Status to the important drugs that are used by different departmentsClass-C Status to routine drugs and medical supplies

    Perpetual inventory management system can be adopted for class A itemsEconomic order quantity can be used to determine the replenishment policy for class CHospital can enter into forward contracts depending upon the usage volume and demand pattern

  • A variety of obstacles to effective supply chain management exist, including:

    Constantly evolving technology resulting in short product life cycles and high cost for physician preference items.

    Difficulty in predicting frequency, duration and primary diagnoses for patient visits and the associated product requirements.

    Lack of standardized nomenclature/coding for healthcare products and commodities.

    Lack of capital to build a sophisticated information technology infrastructure to support supply chain management efforts.

    Inadequate business education and SCM capabilities among hospital-based buyers

  • About 25 per cent of hospital costs are supply-related (Harvard case study). Approximately 35 to 40 per cent of hospital supply-related costs are devoted to handling, moving and processing material and supplies as compared to other industries where it is less than 10 per cent. Purchasers spend approximately 40 per cent of their time, and accounts payable departments spend more than 60 per cent of their time, on manual processing of transactions.

    A single paper-based purchase order may cost anywhere from Rs 500 to Rs 3,000 to process. Current use of electronic inventory management within hospitals only covers 30 to 40 percent of transactions available for automated processing of inventory.

    About 15 per cent savings in supply chain costs would equate to almost five per cent improvement in a hospital's operating margin.

  • Thank You

    *All the records are being entered into inventory cards so as to provide the running balance of qty*