The document outlines the importance and methods of inventory control in healthcare, emphasizing its role in saving costs and ensuring efficient procurement and usage of resources. It details various classification techniques for inventory such as ABC, VED, SDE, and FSN analyses, which help in categorizing items based on consumption patterns, criticality, and supply difficulty. The conclusion stresses that careful inventory classification and analysis are crucial for maintaining costs and providing quality care.

2. Introduction
• Inventory control is more than just
procurement and usage
• The proper controls and processes can
save millions in healthcare costs

3. Inventory
An idle resource of any kind, provided that such
resource has economic value.

4. Definition of Inventory Control
• Planned method of determining what to indent, when to
buy, how much to indent and how much to stock so that
purchasing & storing cost is lowest without adversely
affecting the functioning of the organization
• It means stocking adequate number and kind of stores,
so that the materials are available whenever required
and wherever required.

5. Objectives
• To supply the materials on time
• To meet unforeseen future demand
• To average out demand fluctuations
• To meet the customer requirement timely, effectively,
efficiently, smoothly and satisfactorily.
• To smoothen the production process.
• To facilitate intermittent production of several
products on the same facility.
• To gain economy of production or purchase in lots.

6. Principles of Inventory
Control
• What to order
• When to order
• How much to order
• How much to stock
• How often to order

7. Activities of inventory control
• Planning
• Procuring
• Receiving
• Inspecting
• Recording
• Storing
• Issuing
• Physical verification of product items
• Follow up
• Material standardization
• Substitution

8. Inventory Control Techniques
• ABC - Based on Usage Value
• VED - Vital, Essential & Desirable
• SDE - Scarce, Difficult & Easily
• FSN - Fast, Slow & Non- moving
• HML - High, Low & Medium cost
• XYZ - Value of Items in Store
• GOLF- Source of Supply
• SOS - Nature of Supply

9. ABC(ALWAYS, BETTER,
CONTROL)Analysis
• Equal attention to all items - impossible
• ABC analysis is based on Usage Value of items.
• Usage Value : Consumption x Unit Cost.
• Classify according to high, medium & low usage
value as ‘A’ ‘B’ ‘C’.
• Aim is to give max attn to ‘A’ & least attn to ‘C’ items

11. A-ITEM
• Small in number
• Managed by top management
• Tight control and rigid estimate of requirement
• Strict and close watch
• Require low safety stock
• Consume measure portion of fund
e.g. Ventilator, Dialysis machine, Defibrillator, CT-
Scan machine, MRI Machine, USG, Heart-lung
machine

12. B-ITEM
• Moderate control
• Purchased on rigid requirement
• Strict watch and control is needed
• Safety stock are maintained moderately
• Managed by middle level management
e.g. Suction machine, Oxygen Cylinder,
Nebulizer, Humidifier, Cardiac monitor

13. C-ITEM
• Needed large in number
• Consumed lesser amount of cost
• Ordinary control
• Purchase on usage estimate
• Require high safety stock
e.g. Syringes, Cannula, Gloves, Suction Catheters
etc.

14. Pareto Theory Principle in ABC
ITEM % OF ITEM
( CONSUMPTION)
% OF RUPEE VALUE
(COST)
A 10 70
B 20 20
C 70 10

15. Advantages
• Investment can be maintained
• Easy to control wastage of costly item
• Help in maintaining safety to total cost
• Easy to maintain stock and turnover rate
• Manager is able to control the investment specially
A-item.

16. Disadvantages
• Proper standardization is required.
• Considered the only money value not importance
of item.
• Periodic review become difficult.

17. VED Analysis

18. VED ( VITAL, ESSENTIAL,
DESIRABLE) ANALYSIS
• Classification is based on criticality than on
functional basis.
• V-VITAL ITEMS
It includes items without which a hospital cannot
function
These items should be adequately stocked for smooth
functioning of an organization
Stocked in abundance
Shortage can’t be tolerated
E.g. Oxygen supply, ET tube, ventilator, Defibrillator

19. CONTD.
• E-ESSENTIAL ITEMS
It includes items without which a hospital can
function for a short time but affect the quality of
patient care to a limited extent.
Reasonable risk can be taken.
Controlled by middle-level managers.
E.g. Antibiotics, IVF, X-ray machine, electric
cautery, patient trolley etc.

20. Contd..
• D-DESIRABLE ITEMS
The non-availability of which for a considerable
period may not affect the functioning the
hospital.
They can be purchased easily when required.
Low in stock or not in stock
E.g. Tonics , Cough Syp, B Complex

21. Advantages
• To monitor and control inventory
• Determines criticality of an item
Disadvantages
• Cost Value Not Considered

22. Matrix of ABC & VED ANALYSIS
• Depending on consumption value and criticality
V E D Categor y Item Cost
A AV AE AD 1 10 70 %
B BV BE BD 2 20 20 %
C CV CE CD 3 70 10
V-ITEM E-ITEM D-ITEM
A-item Constant, control
& regular follow-
up
Moderate in
stock
Nil-stock
B-item Moderate stock Moderate stock Low stock
C-item High stock Moderate stock Very low stock

23. FSN ( FAST MOVING, SLOW-
MOVING NON- MOVING)
ANALYSIS
• Analysis is based on consumption pattern of item
and issue pattern of item from stock.
• For analysis, issuing of item in past 2-3 years is
considered.
• Period of consideration and limited number of
issue may vary from organization to
organization.

24. Contd..
• Non-moving item
If no issuing of item during 2-3 year
• S- Slow-moving Item
If issuing 10-15 times during 2-3 Years
• F-Fast Moving Item
If issuing > 10-15 times during 2-3 years

25. SDE( SCARCE, DIFFICULT,
EASY TO OBTAIN) ANALYSIS
• Based on problem faced in procurement and
availability of item
• S-scarce item
Difficult to obtain
Generally imported
In-short supply
Management by top managers
A big safety stock is maintained for such item

26. Contd..
• D-DIFFICULT ITEM
Difficult to procure
Come from distant places
Moderate safety stock is maintained
• E-EASY ITEM
Easy to procure
Readily available in local market
Supply exceeds demand
Minimum safety demand

27. HML Analysis
• Based on unit value of the items
H - High unit cost
M - Medium unit cost
L - Low unit cost
• Purchasing policy is decided

28. XYZ Analysis
• Based on demand variability and
predictability of their demand
• Best for organising consumables and
relative short lifecycles
• X - Fixed Demand
• Y - Fluctuating Demand
• Z - Uncertain Demand

29. GOLF Classification
• Based on nature of suppliers
• ‘G’ - Government agencies, Public sector undertakings
items are imported through govt. agencies.
• Long lead, processing time.
• No credit facility.
• ‘O’ - Ordinary suppliers who form bulk of supplier and
procurement is easy.
• ‘L’ - Local suppliers sell on cash-purchase basis
• ‘F’ - Foreign suppliers, Long lead time
• Govt regulation - import license, port clearance
• Requires higher level of co-ordination

30. SOS (SEASONAL, OFF
SEASONAL) ANALYSIS
• Based on season/ according to necessity in a
specific time
• Seasonal
Available only for a limited period
• Off seasonal
Available through out the year

31. Role of nurse
• Keeping an adequate amount of equipment
and supplies in the ward
• Make sure that equipment and supplies are
in good condition
• Put in a requisition for necessary equipment
for repair and maintenance when needed
• Make sure that equipment and supplies are
conveniently located

32. Contd…
• To be observant of waste and misuse
• To delegate someone the responsibility for
handling supplies and equipment
• Set a standard for the quality of each item
to be maintained in the ward all the time

33. Conclusion
• Careful classification of the inventory and
continuing analysis of those
classifications, can play a vital role in
maintaining cost and providing quality care
• Inventory control is a constant requirement
of any organization