Inventory Management - Unit 1 - Week 3 PDF

COMMUNITY PHARMACY ELECTIVE LOGISTICS FACILITATOR: PATRICIA ROBINSON BPHARM(HONS); MBA;LLB;PGDE;MA( EDU);PHD(STUDENT) GROUP LIST 3 4 LOGISTICS MANAGEMENT Logistics management is a supply chain management component that is used to meet customer demands through...

COMMUNITY PHARMACY ELECTIVE LOGISTICS FACILITATOR: PATRICIA ROBINSON BPHARM(HONS); MBA;LLB;PGDE;MA( EDU);PHD(STUDENT) GROUP LIST 3 4 LOGISTICS MANAGEMENT Logistics management is a supply chain management component that is used to meet customer demands through the planning, control and implementation of the effective movement and storage of related information, goods and services from origin to destination. 5 LOGISTICS MANAGEMENT Logistics management helps companies reduce expenses and enhance customer service. The logistics management process begins with raw material accumulation to the final stage of delivering goods to the destination. 6 LOGISTICS MANAGEMENT Involves management of every item to be stocked in the pharmacy 1. Which items are to be ordered? 2. Classification of items 3. When should item be ordered? 4. How many should be ordered? 5. Monitoring systems 7 INVENTORY MANAGEMENT THE GOAL To maintain as little inventory as possible for as short a time as possible and still meet service level requirements A DELICATE BALANCING ACT 8 INVENTORY MANAGEMENT IS IMPORTANT AS INVENTORY IS :- A major asset Ties up capital Incurs costs Must be Must be investment in managed serving a most effectively to functional companies prevent or purpose minimize: Waste of financial resources Shortage of drugs Decrease in quality of patient care 9 INVENTORY Do not order inventory unless needed WHY? Because there is a cost to the company for carrying inventory 10 INVENTORY COSTS CARRYING COSTS Costs incurred by the very fact that an item is in stock. These include: Carrying cost encompasses holding Capital investment (cash flow) cost and cost associated with Storage and handling costs managing inventory Security Space Obsolescence - the process of becoming obsolete or outdated and no longer used Deterioration/Expiration Insurance Pilferage and Loss Record keeping 11 INVENTORY COSTS ACQUISITION COSTS Include the costs of all activities required to acquire the inventory. These include: Cost of writing/calling in the order Preparing specifications Recording the order Order follow-up Transportation charges Costs of receiving the inventory into stock Processing of invoices IS THERE A DIFFERENCE BETWEEN ACQUISITION COST AND ORDERING COST? Acquisition Cost: This encompasses the entire expense of purchasing an item and bringing it to your inventory. It includes the purchase price, shipping fees, taxes, and any other costs directly tied to acquiring the item. Think of it as the total landed cost of the product. Ordering Cost: This relates specifically to the expenses incurred in the process of placing an order. This includes administrative costs, order processing, invoice handling, and any other expenses directly associated with creating and managing purchase orders. Ordering cost often involves staff time, systems, and paperwork involved in generating and processing an order. 13 INVENTORY COSTS STOCK-OUT COSTS Usually, must be estimated. Definition: Costs that arise when inventory levels are insufficient to meet customer These include: demand. Components: Additional expediting effort Lost Sales: Revenue lost due to the inability Paperwork to fulfill customer orders. Customer Dissatisfaction: Potential loss of Lost customers = Lost revenue customer goodwill and future sales. Poor service Production Delays: Additional costs incurred Poor image from halted production or expedited shipping to meet urgent demands. Effects on staff morale and efficiency Example: A toy manufacturer might face stockout costs if it runs out of popular toys during the holiday season, leading to missed sales and unhappy customers.  INVENTORY 14 LARGER acquisition ORDERS (less costs stock out costs frequent) carrying costs SMALLER acquisition ORDERS (more costs stock out costs frequent) carrying costs MANAGEMENT Decide what DECISION strategy is BASED ON best. WHICH COST IS MOST CRITICAL  Involves classifying inventory items on Based on Pareto’s the basis of Law OR the 80/20 decreasing annual Rule 15 ABC dollar volume or ANALYSIS other criteria Letters A, B, C represent the Unit cost x annual different usage = annual classifications of value descending importance  Determine annual usage or sales for each item. Determine the percentage of 16 STEPS FOR the total usage or sales by item. ABC ANALYSIS Rank the items from highest to lowest percentage. Classify the items into groups.  After ranking the items from highest to lowest percentage, do not force groups to fit the 17 STEPS FOR preset percentages, as these are rough estimates. ABC ANALYSIS The data will naturally group itself and these are groupings that should be used. 18 C items require less The most sophisticated monitoring from a inventory systems financial point of view. should be used for A They are considered low items. These items are priority items; However, high priority items that they should not be require close ignored as patients like to monitoring. You cannot fill their entire afford to be out of stock prescription at one of these items. pharmacy. 19 ABC ANALYSIS EXAMPLE Item Unit cost Annual usage Usage value A $100 1,000 100,000 B $510 5,000 2,550,000 C $1000 3,000 3,000,000 D $250 4,000 1,000,000 E $805 4,000 3,220,000 F $450 8,000 3,600,000 G $25 20,000 500,000 H $300 750 225,000 I $65 6,150 399,750 20 ABC ANALYSIS UNSORTED SORTED Item Usage value $ Item Usage value $ A 100,000 F 3,600,000 B 2,550,000 E 3,220,000 C 3,000,000 C 3,000,000 D 1,000,000 B 2,550,000 E 3,220,000 D 1,000,000 F 3,600,000 G 500,000 G 500,000 I 399,750 H 225,000 H 225,000 I 399,750 A 100,000 21 Cumulative Cumul. Item Usage value Usage Value % F $3,600,000 3,600,000 E 3,220,000 6,820,000 ABC C B 3,000,000 2,550,000 9,820,000 12,370,000 85% ANALYSIS (A) D 1,000,000 13,370,000 G 500,000 13,870,000 10% (B) I 399,750 14,269,750 H 225,000 14,494,750 A 100,000 14,594,750 5% (C) 22 ABC ANALYSIS Class A Class B Class C Priority items Middle ranking Lowest priority  85% of items items expenditures  Next 10% of  last 5% of  Mostly high- expenditures expenditures volume, fast  low-volume, moving or high slow-moving value COMMUNITY PHARMACY ABC ANALYSIS – ASSIGNMENT ( 10% OF INDIVIDUAL ASSESSMENT GRADE TO BE SUBMITTED IN WRITING BY SEPTEMBER 25, 2024 ABC INVENTORY ANALYSIS – PLAY THIS VIDEO FOR TABLE ONE 1. Work out the usage value for each of the items, A to I 2. Sort the items A – I according to usage value, highest usage value first. 3. Classify items A to I according to categories A, B, and C in keeping with ABC Inventory Analysis standards  ABC ANALYSIS - RANKING 26 Class A – Priority items - 85% of expenditures - mostly high-volume, fast moving or high value Class B – Middle ranking items - next 10% of expenditures Class C – Lowest priority items - last 5% of expenditures - low-volume, slow-moving 27 INVENTORY CONTROL ASSIGNMEN T 28 INVENTORY CONTROL ASSIGNMEN T  REORDERING POLICY Managing the inventory of individual items involves decisions concerning: When to place the order How much to order 29  30 REORDERING POLICY 2 BASIC VARIABLE PERIOD, APPROACHES FIXED QUANTITY FIXED PERIOD, PERPETUAL VARIABLE REORDER QUANTITY POINT/EOQ SCHEDULED PERIODIC REVIEW Economic order quantity SYSTEM (EOQ) EOQ calculates the optimal order quantity to minimize total inventory costs. EOQ focuses on minimizing costs, while the periodic review system emphasizes ease and practicality. FIXED PERIOD, VARIABLE QUANTITY Fixed-period, variable-quantity is an approach where you review your inventory at regular intervals but the quantity you order varies based on current stock levels and demand during that period. Essentially, you're topping up your inventory to a desired level. For example, if you check inventory every month, you’d order enough to reach your target level each time you review. This way, you can be flexible with your orders based on real-time needs without constantly monitoring stock. Handy if your inventory fluctuates or you want to avoid stockouts. VARIABLE PERIOD, FIXED QUANTITY Here, you order a set amount of inventory, but the timing of when you place these orders varies based on your inventory levels. For example, if you always order 100 units, but you only place an order when your stock falls below a certain threshold, the periods between orders will differ depending on how quickly you deplete your inventory. This approach is practical if you have a good handle on your typical order quantities but your consumption rates can fluctuate. Balances flexibility with a level of predictability. ECONOMIC ORDER QUANTITY (EOQ) A formula-based inventory management system. Determines the optimal order quantity that minimizes the total inventory holding and ordering costs. Assumes a constant demand rate and lead time. Orders are placed when inventory levels reach a certain reorder point. In general, lead time in inventory management is the amount of time between when a purchase order is placed to replenish products and when the order is received in the warehouse. 34 PERIODIC REVIEW SYSTEM Quantity in stock reviewed at set frequency e.g. monthly, weekly Does not require automated support Visual inspection or physical count at set intervals and determination of amount to be ordered PERIODIC REVIEW SYSTEM Orders are placed to replenish inventory to a predetermined level. Doesn't require constant monitoring of inventory levels. Useful when there's a variable demand or if it's cost-effective to review inventory periodically.  BALANCE 36 Too Prevent Much Stock- and Inventor outs y ockout happens when an item is completely out of stock and unavailable for purc 37 INVENTORY FILE Item number Item description Allocated quantity Available quantity Lot Size Quantity Lead Time Item Cost Inventory Carrying Cost ABC code Safety Stock Location  INVENTORY CONTROL SYSTEMS Records can be either manual or computerized May have a combination to improve accuracy and accountability Computerization is desirable especially in a perpetual purchasing modality. Bar coding helps with accuracy. Periodic planned and ad hoc stock counts are required 38  RECOMMENDATIONS TO REDUCE INVENTORY/LESS STOCK-OUTS Hold inventory to cover the maximum expected demand to cover supplier replenishment time (lead time) Order what was sold as frequently as is feasible Use buffer management to signal when adjustment needed to parameters Stock Taking 39 HEALTH 40 INSURANCES Sagicor Medecus Canopy NHF JADEP Others  USA 41 CONFIDENTIALITY 43 STORE PATIENT DATA AND DRUG HISTORY 44 SEVERAL SYSTEMS AVAILABLE IN JAMAICA. Pharmacy Works PharmPartner Myrie System Public Patient Partnership ( PPP) PIMS JADEP STOCK – OBTAINED FROM NHF STOCK IS STORED SEPARATELY FROM THE REGULAR PHARMACY STOCK. 46 JADEP - $40 PER ITEM COVERED. Launched by the Ministry of Health in Hypertension Cardiac conditions 1996, the Jamaica Drug for the Elderly Arthritis Programme (JADEP) improves access to Benign prostatic hyperplasia essential drugs through payment High cholesterol subsidies. Vascular disease It provides a 100 per cent subsidy for Diabetes specific drugs covering 10 chronic Glaucoma illnesses for all residents of Jamaica over Asthma the age of 60. Psychiatric conditions  47 Asthma & Subsidy for Spacers & Masks ILLNESSES COVERED Arthritis THE NHF CARD PROGRAMME IS Breast cancer & Breast Cancer Receptor S tudies Test WITHOUT AGE RESTRICTIONS Benign prostatic hyperplasia AND PROVIDES SUBSIDIES TO Diabetes & Diabetes Programme BENEFICIARIES FOR THE Epilepsy TREATMENT OF 17 CHRONIC Glaucoma ILLNESSES. THESE INCLUDE: High Cholesterol Hypertension Ischaemic heart disease Lupus Major depression NHF Prostate cancer Psychosis Rheumatic fever/heart disease Sickle cell disease Vascular disease 48 NATIONAL HEALTH FUND - NHF PHARMACEUTICAL DISTRIBUTION COMPANIES IN JAMAICA What How many products can you do they name? carry? 50 COMPUTER SYSTEM PHARMACY WORKS FUTURE CLASS EFFECTIVE COMMUNICATION CONSEQUENCES OF THE PHARMACIST AS AN UNSKILLED OR SKILLED COMMUNICATOR UNIT 3 STUDENTS PRESENTATION S  TOPICS FOR INDIVIDUAL WORK – UNIT 3 OCTOBER 2ND, 2024 a) Cough, Cold and Allergy- Sherica Brooks b) Constipation - Tashoi Savery c) Diarrhea - Tenese Brown d) Nausea and Vomiting - Shaquilla Bryant e) Anthelmintics - Jodian Butt f) Heartburn and Dyspepsia -- Shanique Cole g) Pain and Fever -- Chevanese Cole h) Minor burns, Sunburn and wound care - Yessica Dawkins i) Ophthalmic and Otic Disorders - Prince Dawkins j) Home Monitoring ( Blood Pressure) – Kimone Demetrius  TOPICS FOR INDIVIDUAL WORK – UNIT 3 OCTOBER 9TH, 2024 k) Smoking Cessation - Monisha Edwards l) Natural and Herbal Products - Debra Fagon m) Sleep Aids and Stimulants - Oshene Higgins n) Ostomy and ostomy supplies - Kristoff Kirby o) Prevention of pregnancy and sexually transmitted diseases - Kevonette Marshall p) Oral Contraceptives – Abigail McIntosh q) Emergency Contraception - Devonette McIntosh p) Managing selected adverse effects of cancer chemotherapy – Ayomide Popoola q) Patient education, training and counselling ( prepare pamphlet on nutritional education)– Cheyenne Powell r) How to use a spacer and a Peak flow meter – Abegail Rose  TOPICS FOR INDIVIDUAL WORK – UNIT 3 OCTOBER 16TH, 2024 ( FIRST HALF OF THE CLASS) s) How to administer Insulin – Shari- Ann Turner t) Blood glucose monitoring – Jonelle Thomas u) Testing Devices ( covid testing , pregnancy testing ) – Shay Shanell w) HIV testing – Kelley Hylton x) Breast Self examination – Sanekie Barnes