Inventory Mgmt II--A Holistic View

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Supply chain issues are increasingly critical to the financial solvency of a pharmacy organization. In community, this means purchasing from reputable wholesalers and vendors, keeping an eye on drug price increases that are not updated timely for reimbursement purposes, and of course making sure that you have the right amount of inventory that turns over in an appropriate amount of time. Additionally, in hospital settings, this translates to optimizing the supply chain within the organization so as to maximize patient safety and minimize inventory costs, carrying costs, and wastage.

Labuhn et al address these and related topics in their paper on supply chain optimization.1 They describe a successful supply chain optimization project that leveraged technology, engineering principles, and a technician workflow redesign in a growing health system. Since the hospital pharmacy department is now viewed as a cost center, medication inventory management is critical. Proper management of central pharmacy inventory and floor-stock inventory in automated dispensing cabinets (ADCs) can be challenging. In an effort to improve control of inventory costs in the central pharmacy of a large academic medical center, the pharmacy department implemented a supply chain optimization project in collaboration with the medical center's in-house team of experts on process improvement and industrial engineering. The project had 2 main components: (1) upgrading and reconfiguring carousel technology within an expanded central pharmacy footprint to generate accurate floor-stock inventory replenishment reports, which resulted in efficiencies within the medication use system, and (2) implementing a technician workflow redesign and algorithm to right-size the ADC inventory, which decreased inventory stockouts (i.e., incidents of depletion of medication stock) and improved ADC user satisfaction. The study concluded that through a MULTIFACETED approach to inventory management, the number of stockouts per month was decreased and ADC inventory was optimized, resulting in an inventory cost savings of $220,500.

Pharmacy managers cannot view purchasing and inventory control as an isolated function. Inventory and supply chain management infers not just flow of money but the use of human capital and re-engineering to ensure that all of the right medications (inventory) are at the right place at the right time and at the right quantities. A hospital system has inventory within the pharmacy, but also as floor stock in various wards/units throughout the organization, in crash carts, and elsewhere. This requires a holistic view of inventory management beyond merely acknowledging the total use of various drugs and supplies.

Additional information about Leadership and Organizational Structure and Behavior can be found in Pharmacy Management: Essentials for All Practice Settings, 5e. If you or your institution subscribes to AccessPharmacy, use or create your MyAccess Profile to sign-in to Pharmacy Management: Essentials for All Practice Settings, 5e. If your institution does not provide access, ask your medical librarian about subscribing.

1Labuhn J, Almeter P, McLaghlin C, et al. Supply chain optimization at an academic medical center. Am J Health Syst Parm. 2017;74:1184-1190.

Shane Desselle

Professor of Social and Behavioral Pharmacy, Touro University California


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5 months ago

Did you know that proper mgmt of supply chain often came a difference between profitability and loss?