How to diagnose inventory management issues in healthcare supply chains

Healthcare Materials Management

Published on: September 8, 2020

Inventory management issues in healthcare supply chains are nothing new. For years, hospitals and long-term care facilities have seen expensive inventory go to waste, and unused materials tie up valuable storage space. Surplus stock, emergency “just-in-case” supplies, and shelf-life limitations all exacerbate these issues.

Supply chains have become something of a buzzword across most industries. When it comes to healthcare, the importance grows as materials are often needed to save lives. Introducing a systematic supply chain doesn’t just save time and money. It also frees up the minds of healthcare workers to worry about the patients, knowing that the materials they need will always be on hand.

But before you jump in, you must step back and diagnose the problems with your supply chain. It’s impossible to fix any issue without first fully understanding what’s causing it. In this blog, we will list the common inventory issues, then the steps to identifying your problems and creating a systematic supply chain that will never let your healthcare workers down.

Common inventory management issues in healthcare:

  • Expensive supplies and materials
  • High costs for storage of supplies
  • Consistent stockouts
  • Static inventory or low turnover of materials
  • Large amounts of obsolete or expired supplies
  • High amounts of working capital
  • Inconsistent data and errors in spreadsheets
  • Loss of customers due to lack of supplies
  • Uncertainty regarding the source of inventory issues

How to identify and fix common inventory management issues in healthcare

Mapping supply chain management issues

1. Create a comprehensive list of all your inventory issues

No one person will be able to create this list. You must gather information from across your healthcare facility or facilities. A nurse may see different issues than the person in charge of storage, and the accounts team may be frustrated by something else entirely. Survey everyone involved at every link in the supply chain as you need a clear picture of all issues experienced.

2. Categorize the inventory issues so you can tackle them

You may find the list you end up with is quite long and covers a lot of ground. Try to break it up into categories that will help you better understand crossovers between issues. For instance, the inaccurate entry of data is likely to impact several areas of the supply chain.

3. Investigate any issues that have an unclear source

If you’re unsure why a problem is happening, it is best to ask some questions. For example, if too many boxes of unused medications are taking up valuable storage space, it may be a good idea to follow the supply chain. You should figure out why exactly this is occurring.

It could be that orders occur on a recurring rotation without first checking existing supplies. It could also be a data entry issue or even just a member of the team with a desire to have extra supplies on hand. Once you know where the problem is coming from, it’s easier to prioritize this issue and decide how best to deal with it.

4. Prioritize the inventory issues

To prioritize the problems, you must identify which issues cause the most significant or most problematic losses. For example, you may find that incorrectly located material is a higher priority than overstocks because it impacts more lives. Equally, you may find that obsolete material is a priority as it ends up costing your healthcare facilities a lot of money.

Most supply chains will make financial justification the key to prioritizing a category, but when it comes to healthcare, the situation is more nuanced. Saving lives comes first, and so solving any issues that will result in better healthcare will most likely be a top priority.

5. Track the issues to get a clear measure of their frequency

You may not want to rush in with solutions just yet. Although you have a list of issues, you’ve no idea how frequently each one might occur. It’s best to start to track these occurrences so that you know which happens most often. If you have multiple locations, each team must track its inventory problems separately so that you can get a clearer idea of what is and isn’t working.

Set up a reporting system (a spreadsheet may work) that allows your team to record critical information about each issue. Essential information to record includes location, product, age of the stock, the issue with the stock, details as to why the problem occurred.

6. Tidy up the existing inventory and stock records

Before you start to solve the issues, you first need to tidy up the existing supply chain. Ensure all data is updated, expired items dealt with, and sort storage so that materials are in the right places. Once this short-term tidy is complete, you can begin to consider how best to fix the underlying issues.

7. Implement a longer-term solution

Even with the best intentions, a short-term tidy up will only last so long. If the management of the supply chain does not change, it’s only a matter of time before the same inventory issues resurface.

A long-term solution will most likely include changes to the existing supply chain management processes and involving technology. Much of the issues in today’s healthcare supply chains come down to human error, obsolete processes, and poorly managed stock. By introducing automation to the supply chain, you will solve many of the issues.

Automating your healthcare supply chain may be the answer

Not only will a dedicated healthcare ERP solution solve data inconsistencies, but it can help you forecast the usage of stock, request material promptly, and enable users to scan and use items immediately. A system that automates the supply chain allows your team to get the job done quickly and efficiently without worrying about keeping track of materials after a long day treating patients. If you’re investing in an ERP, check out our blog on ten steps to help you build an ERP checklist.

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