Is Your Hospital Actually Managing Inventory?

By Cheryl Flury

March 15, 2017

So many hospitals aren't managing inventory!

Our team spends a lot of time in hospital supply rooms and in almost every facility, we see a requisitioning method we call “par replenishment.” This seems to be the most common form of supply ordering found in hospitals today. But people THINK it’s inventory management.

Here’s what’s supposed to happen: supply technicians enter a supply room and visually scan each item on the shelf. If they see something that appears to be low, they’ll scan the item using a barcode scanner on a mobile computer, then enter in the current quantity on the shelf. This quantity will be compared against a par value and, if needed, generate a requisition to restock the item.

What often happens instead: a supply tech enters a store room and thinks several items look low, so he or she enters a number that will trick par levels and trigger a reorder. The problem is pretty clear – supply levels end up “off” and par levels get further from accurate. Then ripples start to occur…

- First, it’s easy to miss items that have fallen below par – so you get stock-outs.
- Then nurses start to doubt supply chain and create their own personal safety stock of hidden supplies.
- Next there’s a doctor, upset by the stock-out, so nurses ignore purchasing contracts and rush-ship materials, costing the hospital more in item and freight costs. 
- Now comes overstocking, which not only costs more money, but also results in waste from expiring products. (Nobody ever checks the expiration date on the boxes hidden in the ceiling tiles.)

Par levels in a par replenishment system often mean nothing because there’s no accurate item velocity. As a result, inventory is not being managed, it’s simply being continually reordered.

Let’s talk more about this! Join our LinkedIn group at Stop Par Replenishment and join the conversation about par replenishment. We're bringing people together to exchange ideas about better approaches to inventory management.