8 Strategies for Better Inventory Management
"The old adage of having the right product at the right time is fundamental, but it should not be taken for granted," says Jon Pruitt, vice president of procurement solutions at Provista. "The proper tools, planning and communication are important to ensure that the proper inventory is available in the appropriate quantities to support effective and efficient surgery center operations."
Here are five strategies for efficient inventory management at ASCs:
1. Create an inventory manager position. According to Randy Piper, vice president of non-acute contracting at Amerinet, an essential aspect of effective inventory management is appointing one person be responsible for management and organization. It is important to have one person dedicated to overseeing the stocking of supplies, reordering products and labeling supplies. "Somebody really needs to own that and that responsibility should not be spread among different people," he says. "It helps to have that accountability."
The person in charge of inventory management can keep track of the amount of supplies used at the center and reorder supplies accordingly. "A lot of supplies get lost due to expiration," says Mr. Piper. "Inventory managers can organize supplies by expiration so the oldest products are being used first. And then order more supplies accordingly."
2. Eliminate waste. A single person responsible for inventory management also helps eliminate wastefulness caused by lack of communication between different departments at a surgery center, says Shirley Hines, RN, CASC, LHRN, administrator of Atlantic Surgery Center in Daytona Beach, Fla. For example, the multiple departments may notice the same product is low and both order replacements.
If it is not possible for an ASC to hire a new staff member for inventory management alone, surgical technicians can take on inventory management responsibilities. "Surgical technicians make good inventory managers as they are familiar with the products and they also know when the physicians change their practice patterns or preference cards. They are on top of those changes," Ms. Hines says.
3. Have an inventory management system. ASCs without an inventory management system find it more difficult to maximize supply chain operations. "Many ASCs today still use a very manual and archaic process of ordering and maintaining supplies," says Jon Pruitt, vice president of procurement solutions at Provista. "Requisitions or request for supplies from the various areas may come in the form of a post-it note left on the desk or a handwritten note that indicates an out-of-stock situation."
ASCs are able to see products they need easily on a computerized system. This helps reduce high costs associated with expedited shipping as well as reducing the need for higher inventory stock at the ASC. A system will also allow for greater transparency of supply costs, management of strategic product categories and other important performance measures so the ASC can take action to improve efficiencies in operations, according to Mr. Pruitt.
4. Automate reordering. Inventory management software also results in cost-savings in other ways. For example, the system can track the amount of supplies typically ordered by the facility, and it can be set up to automatically reorder supplies on a particular date, making reordering very easy, says Mr. Piper. "Product distributors offer this software for free or at a very nominal fee and ASCs that are not taking advantage of these technologies should look into it," he says.
However, according to Ms. Hines, ASCs that have inventory management software should still have an inventory manager in charge of the technology, to avoid over- or under-ordering during a sudden lull or boom in case volume. "You need to have someone managing the system closely," she says. "The systems are only as good as the people running them."
5. Implement comprehensive standardization. Standardizing the products used in a surgery center can help reduce inventory space, supply cost and the activity around inventory. ASCs can implement a standard operating procedure wherein a core list of products is agreed upon within the ASC and only those are used.
"Have a product taskforce made up of the clinical, materials and leadership team to aid in selecting the most appropriate products in each category to reduce the need for multiple products being maintained for the same purpose within the ASC," Mr. Pruitt says. "As you progress through the commodity items, proceed through some of the clinically sensitive items and ultimately some of the physician preference items to achieve significant savings by standardizing within your ASC."
6. Incorporating a consignment strategy. Surgery centers can look into consignment opportunities with supply companies to help reduce costs and eliminate overstocking.
"We have a consignment agreement with Bausch and Lomb for lenses," Ms. Hines says. "They give us a certain amount of the product, and we send a report to them about how much of it we used in a particular time period. Bausch and Lomb bills us only for the amount we used and sends in replacements."
According to Mr. Pruitt, the appropriate use of consignment for high-cost inventory items can be an effective tool in reducing and transferring the holding cost of supplies to the business partner. "However, a comprehensive analysis of the supply cost with a consignment strategy and without the consignment strategy should be evaluated," he says.
7. Avoid opening supplies too early. Sometimes staff members will open supplies based on physicians' preference cards, but if the physicians have changed their practice and the products they use, the opened supplies go to waste. "It is imperative that physician preference cards be regularly updated," says Ms. Hines.
8. Inform departments when products aren't available. Another wasteful practice is constantly putting in orders for products that are out-of-stock. If departments keep putting in orders, the surgery center may end up with far more supplies than it needs once the product becomes available. "This is a common occurrence with drugs," says Ms. Hines. "Departments should be informed when a product is not available so that they don't keep ordering it."
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