Scientific inventory planning in materials management.

This is all just one example of how computer and appropriate analytical software routines can improve the fiscal and physical efficiency of the hospital materials management department. Together, they can provide logical, unemotional guidelines for purchase quantities, reorder points and safety stocks. Once a computer based materials management tool is in place and the materials manager has appropriate software at his or her disposal, a whole array of other possibilities can open up. For example, with appropriate analytical software and about six months of data, materials managers can estimate the performance of a current inventory system, comparing it to the expected results of upgrading current software. In effect, you can predetermine the cost-effectiveness of embedding economic order quantities, reorder points and service level policy routines before committing to such a course. Another valuable tool for materials management is "cost/use variance" software, which can pinpoint quickly and by line item whether inventory costs are rising due to higher vendor costs or to expanded use of products, and what percent each represents. A natural extension of this is an ABC analysis to identify groups of line items deserving more or less intense management. Continuous vendor performance tracking is another candidate for analytical software. The cost consequences of partial, late or missed deliveries can be severe, and delivery documentation becomes critical if the hospital has a performance liability agreement with the vendor. Other analytical software may permit dramatic improvement in storeroom labor efficiency through logical stock location schemes. In short, the basic formulas for scientific inventory management are only the beginning of a complex materials management story.