Identify 10 inventory items found in an healthcare organization.
Which of these might be classified as A, B, or C items? Why?
How would you manage these items differently depending on their classification?
Supply chain management (SCM) is an important facet of healthcare management because good SCM can lead to optimizations and efficiencies in purchasing and storing inventory, thereby reducing costs (McLaughlin et al., 2022). As a critical component of SCM, “inventory management helps determine how much inventory to hold, when to order, and how much to order” (McLaughlin et al., 2022, p. 317). One article estimated that supplies make up approximately 30% of hospital budgets and spending (Mohammed & Workneh, 2020). When an organization does not manage its inventory well, this mismanagement can cause either too much inventory on hand (surplus) or too little inventory on hand (shortage) (Lukinskiy et al., 2020).
To assist healthcare managers in managing inventory, classification methods are useful in grouping supplies and pharmaceuticals into categories based on value or demand. One such method is the ABC method, which utilizes the Pareto principle to group items according to dollar and volume usage (McLaughlin et al., 2022). “ABC analysis helps in identifying items that require greater attention for control” (Mohammed & Workneh, 2020, p. 114). In the ABC classification system, items with a high dollar amount (up to 70%) but lower volumes of usage (around 10%) are “A” items. Items with a moderate dollar amount value and moderate usage (both around 20%) are “B” items, and items with the lowest dollar amount value (10%) but higher usage (70%) are “C” items (McLaughlin et al., 2022).
For a healthcare organization to provide quality healthcare to patients, it must have adequate supplies and medications. Examples of ten common inventory items in a healthcare organization are as follows: syringes, sutures, staples, catheters, medical gloves, masks, gauze/dressings, splints/braces, nebulizers, and stretchers. Due to the higher dollar value but lower usage, stretchers would likely be considered to be “A” items. Since splints/braces and nebulizers are higher dollar items and moderately used, they would be considered to be “B” items. Finally, the remaining 7 example items are low in dollar value but very heavily utilized, thus making them “C” items. Each of these item groupings would require different levels of management because some items are more important than others are and need to be monitored and tracked more closely. To do so, a supply chain manager might elect to use RFID or barcodes to track the “A” items. Alternatively, “C” items would be tracked more loosely (McLaughlin et al., 2022). Similarly, the ABC method of classification also works for complex pharmaceutical inventory management, but the risks are a bit higher due to the potential for wastage if improper management occurs (Mohammed & Workneh, 2020).
Inventory management is a key component of healthcare delivery, and a healthcare manager should have a good grasp on ways to improve efficiencies and reduce inventory costs. Proverbs 21:5 says, “The thoughts of the diligent tend only to plenteousness; But of every one that is hasty only to want” (King James Bible, 1769/2017). Healthcare managers must be diligent in their planning to ensure that the necessary supplies are in stock so that effective care delivery can occur for patients.
King James Bible. (2017). King James Bible Online. https://www.kingjamesbibleonline.org/ (Links to an external site.)(Original work published 1769)
Lukinskiy, V., Lukinskiy, V., & Sokolov, B. (2020). Control of inventory dynamics: A survey of special cases for products with low demand. Annual Reviews in Control, 49, 306–320. https://doi.org/10.1016/j.arcontrol.2020.04.005 (Links to an external site.)
McLaughlin, D. B., Olson, J. R.,
According to McLaughlin et al. (2022), inventory is the stock of items by an agency or organization either for sale or to help deliver a service. Therefore, in healthcare organizations, inventories entail supplies and pharmaceuticals. The organization can keep track of all the medical equipment and supplies with the inventory. Further, it offers the organization to cope with differences in supply and demand while ensuring all the orders made within the hospital are cost-effective to avoid overstocking and obsoleteness of the items. Practical and well-organized management needs a proper classification system, stock monitoring, reliable forecast, lead time expertise, and realistic holding estimates (McLaughlin et al., 2022). With an appropriate inventory method in place, the organization is deemed to offer better costs and manage the supply. Therefore, in this discussion, we have identified at least 10 inventory likely to be found in a healthcare organization. These include; hospital stretchers, sterilizers, ECG machines, Defibrillators, Anesthesia Machines, patient monitors, surgical lights and surgical tables, Blanket and Fluid Warmers and generators.
According to McLaughlin et al. (2022), not all items are equal. For instance, some might be critical to the organization while others might be costly and others inexpensive. Also, some inventories might be used in large volumes, and others are not used often. Therefore, classifying the items within the organization becomes critical as it helps the organization manage its inventory effectively and allows them to focus on essential items and place less emphasis on things that are not critical. In most cases, organizations adopt the ABC classification system approach that categorizes the items into three categories.
The items under category A have a high dollar volume but account for a small number of items. On the other hand, the items under the B category have a moderate dollar and volume. Lastly, category C entails the low dollar items bit high volume items. The items under the classification A are the most critical and are closely managed, while B and C items are not essential and are less closely overlooked. In a healthcare setting, the items that are classified as “A” items are the ones that are ordered more frequently than B and C, and their inventory accuracy is checked on a regular (Y?lmaz, 2018).
Based on our list, the items under category A of classification include the ECG machines, surgical lights, and pharmaceutical drugs. These are items used in the hospitals and contain high dollars. Other items such as sterilizers and generators are likely to fall on classification B, and lastly, under the C category, these items may include anesthesia machines, among others.
To manage these inventories, one requires forecasting the demand to understand the usage. When such items reach their minimum levels, they can replenish to avoid stockouts, which might be detrimental to the organization and the lives of the individuals.
The items under category A could be checked often to understand the minimum quantity. In contrast, the others could be reviewed after some time as they are not fast-moving as the items under the other categories (Abdul Rahim et al., 2018).
Also, as we keep an inventory of our stock, it is essential to keep ourselves in the spirit of gentleness lest we get tempted. According to the book of Galatians 6:1-2, “Brothers if anyone is caught in any transgression, you who are spiritual should restore him in a spirit of gentleness. Keep watch on yourself, lest you too be tempted. Bear one another’s burdens, and so fulfill the law of Christ.”
Abdul Rahim, M. K. I., Hassan, Q., Nadarajah, S. S., & Radzuan, K. (2018). A case study of inventory analysis in a healthcare product manufacturing company. International Journal of Supply Chain Management (IJSCM), 7(1), 126-130.
McLaughlin, D. B., Olson, J. R., Sharma, L., & Association of University Programs in Health Administration. (2022). Healthcare operations management.
Y?lmaz, F. (2018). The drug inventories evaluation of healthcare facilities using ABC and VED analyzes. Istanbul Journal of Pharmacy, 48(2