Essential Guide to Material Management in Healthcare Organizations

MATERIAL MANAGEMENT

INTRODUCTION Materials are an essential resource to achieve the objectives of a health care organization. While about 60 per cent of the funds of health sector are consumed to provide manpower health care being a labour intensive activity almost 40 %of the funds are used up for providing materials. In the absence of materials required for health care activities, the manpower deployed is rendered non-functional. Therefore, it is of great importance that materials of right quality are supplied to the consumers in high quality at right quantity at right time and at right place of use.

DEFINITION 1.Material management can be regarded as the function responsible for the coordination of planning, sourcing, purchasing, moving, storing and controlling materials in an optimum manner so as to provide service to the consumer at a minimum cost.

DEFINITION 2.Material management is the integrated functioning of purchasing and allied activities so as to achieve the maximum coordination and optimum expenditure in the area of materials.

AIM OF MATERIAL MANAGEMENT To get The Right quality Right quantity of supplies At the Right time At the Right place For the Right cost

COMPONENTS OF MATERIAL MANAGEMENT Obtaining /acquiring Storage Distribution Exercising control

PURPOSE OF MATERIAL MANAGEMENT To gain economy in purchasing To carry reserve stock to avoid stock out To stabilize fluctuations in consumption To provide reasonable level of client services Increase efficiency of health care systems Develop knowledge and skills of health care Provide materials in required quantity and quality as and when required

FOUR BASIC NEEDS OF MATERIAL MANAGEMENT 1. To have adequate materials on hand when needed 2. To pay the lowest possible prices, consistent with quality and value requirement for purchases materials 3. To minimize the inventory investment 4. To operate efficiently

BASIC PRINCIPLES OF MATERIAL MANAGEMENT 1. Effective management & supervision. It depends on managerial functions of Planning Organizing Staffing Directing Controlling Reporting Budgeting 2. Sound purchasing methods 3. Skillful & hard poised negotiations 4. Effective purchase system 5. Should be simple 6. Must not increase other costs 7. Simple inventory control programme

BASIC PRINCIPLES OF MATERIAL MANAGEMENT 1. Effective management & supervision. It depends on managerial functions of Planning Organizing Staffing Directing Controlling Reporting Budgeting 2. Sound purchasing methods 3. Skillful & hard poised negotiations 4. Effective purchase system 5. Should be simple 6. Must not increase other costs 7. Simple inventory control programme

MATERIALS MANAGEMENT FUNCTIONS 1. Material planning and programming 2. Purchasing and outsourcing 3. Transportation and material handling 4. Storekeeping and warehousing 5. Codification

CONTD 6. Inspection and quality control 7. Standardization and evaluation of all products 8. Distribution 9. Cost reduction through value analysis 10. Inventory control 11. Disposal of surplus / obsolete material

ESSENTIAL REQUIRMENT OF MATERIAL MANAGEMENT Right material Right quality Right quantity Right time Right price Right supplier Right user Right cost(minimum)

TYPES OF PURCHASE 1.Decentralized purchase 2.Centralized purchase 3.Group purchase

TYPES OF MATERIAL S.No Content Description 1 Drug and medicines Used of prevention and treatment of various types of ailments, including anaesthetic agents, vaccines and drugs required for specific purposes 2 Supplies Materials required in the hospital for diagnosing and treating of ailments, such as cotton, bandages, gauze or other dressing materials , syringes, needles, forceps, splints, plasters, trays, bottles, linens, utensils, that are related directly or indirectly to the treatment. Supplies may also include items of linen like draw sheet, bed cover, mattresses, pillows, masks, etc. A comprehensive list of supplies of hospital requirements has to be prepared and will need updating and modification from time to time depending upon the type of expertise, personnel of levels of technology available in the hospital

TYPES OF MATERIAL S.No Content Description 3 Equipment and instruments These include various types of furniture and other instruments and equipment required are sterilizers, X-ray machines, other diagnostic equipment like auto analysers, cell counter, Eliza readers and arterial blood gas analysers. Oxygen and nitrous oxide gas cylinders, cooking LPG cylinders, mechanical laundry, washing machines and incinerators for bio-waste management may also be used as tools. Ambulances and vehicles are also a part of supplies 4 Facilities Normally, these are nonmovable materials or fixed assets, used for a long term compared to equipment. That have limited life span. These include buildings, toilets, lifts, water tanks and pumps, wells, kitchen and cooking facilities, and telephones and public address systems

PROCUREMENT Procurement is the acquisition of goods and/or services at the best possible total cost of ownership, in the right quality and quantity, at the right time, in the right place and from the right source for the direct benefit or use of corporations, individuals, or even governments.

OBJECTIVES OF PROCUREMENT SYSTEM Acquire needed supplies as inexpensively as possible Obtain high quality supplies Assure prompt and dependable delivery Optimize inventory management through scientific procurement procedures

PROCUREMENT CYCLE Review selection Determine needed quantities Reconcile needs & funds Choose procurement method Select suppliers Specify contract terms Monitor order status Receipt & inspection

METHODS IN PROCUREMENT PROCESS AND NEGOTIATION STRATEGIES Open tender Restricted or limited tender Negotiated procurement Direct procurement Rate contract Spot purchase Risk purchase Many suppliers strategy For Govt. Institutions Fixed Quantity Contract Running Contract Rate Contract

POINTS TO REMEMBER BEFORE PURCHASE OF AN EQUIPMENT Latest Technology Availability of maintenance and repair facility, with minimum down time Post warranty repair at reasonable cost Upgradeability Reputed manufacturer Availability of consumables Low operating costs Installation Proper installation as per guidelines

STORAGE OF AN EQUIPMENT Stores must be of adequate space & size to accommodate all the drugs, instruments and appliances Sufficient number of steel racks with shelves to be provided Medical store should be situated near to other stores It should be easily accessible to the suppliers as well as indentors Materials must be stored in an appropriate place in a correct way Refrigeration should be provided for storage of thermo labile items, A graded temperature zone concept is essential in medical stores Group wise and alphabetical arrangement helps in identification and retrieval First-in, first-out principle to be followed Monitor expiry date Follow two bin or double shelf system, to avoid Stock outs Reserve bin should contain stock that will cover lead time and a small safety stock

INVENTORY CONTROL : It means stocking adequate number and kind of stores, so that the materials are available whenever required and wherever required. Scientific inventory control results in optimal balance.

OBJECTIVES OF INVENTORY To reduce financial investment in inventor s To facilitate smooth operation If an offer of discount comes for a bulk purchase, to decide whether to go bulk purchaser not. production

PRINCIPLES OF INVENTORY MANAGEMENT There are two 1. Determination of order quantity 2. Determination of reorder point of record level

CLASSIFICATION OF AN INVENTORY Raw Material Inventories Finished Goods Inventory In Process Inventory Indirect Inventory Transaction Inventory Speculative Inventory

FUNCTIONS OF INVENTORY CONTROL To provide maximum supply service, consistent with maximum efficiency & optimum investment. To provide cushion between forecasted & actual demand for a material

SELECTIVE CONTROLS IN MATERIAL MANAGMENT 1. ABC analysis 2. VED analysis 3. HML analysis 4. XYZ analysis 5. FSN analysis 6. SDE analysis 7. GOLF analysis 8. SOS analysis

ADVANTAGES OF INVENTORY 1. Delivery in time 2. Possibility of discount for bulk purchase 3. Unforeseen circumstances can be handled to some extent 4. Workers and machinery needn t idle

DISADVANTAGES OF INVENTORY 1. Working capital is tied up 2. More space required 3. Increases insurance charges 4. Increased overhead expenses 5. Changes of replacement etc is more 6. Increase change for obsolescence damage, pilferage