powerpoint presentation

VILA HEALTH

PACEMAKER INVENTORY

Jon Doe

BHA4110

Capella University

October 2021

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Overview of Inventory Control

Inventory control is to minimize the total cost of inventory.

Inventory Models Goals

How much to order

Where to cut cost

Which is going quickly

How much deadstock

What is increasing holding cost

Inventory management is one of the essential assessments that every company must perform in order to be able to keep track of the production process smoothly and avoid any kind of interruption in the process(Heizer et al., 2017). A prominent inventory is considered a core component of the supply chain and is where all areas of the supply chain come together in tandem. Inventory control includes several different aspects such as controlling and overseeing purchases from suppliers and customers, maintaining the storage of stock, controlling the amount of product for sale and order fulfillment. The goal is to have the correct product in the needed quantity at the right location at the right time for the lowest total cost.

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Overview of Inventory Control

Economic Order Quantity (EOQ) minimizes

Inventory cost

Holding cost

Shortage cost

Ordering cost

ABC Analysis

(Kwon et al. 2016)

Economic order quantity (EOQ) is the ideal order quantity a company should purchase to minimize inventory costs such as holding costs, shortage costs, and order costs. This production-scheduling model was developed in 1913 by Ford W. Harris and has been refined over time. The formula assumes that demand, ordering, and holding costs all remain constant. Holding costs are those associated with storing inventory that remains unsold. These costs are one component of total inventory costs, along with ordering and shortage costs. A firm’s holding costs include the price of goods damaged or spoiled, as well as that of storage space, labor, and insurance.

Ordering costs are the expenses incurred to create and process an order to a supplier. These costs are included in the determination of the economic order quantity (EOG) for an inventory item like the pacemaker. One strategy Vila Health can use in a perpetual system is ABC analysis. This classifies inventory items based on the item’s consumption value. That value is the total value of a piece of inventory consumed over a specific time frame. The letters stand for the different categories items can be placed into.

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REVIEW OF EOQ PURPOSE AND DATA

Prior year 2019 Pacemaker annual use 2,500

Current year 11th month usage 2109

Current year projected demand 2301

Pacemaker cost $35

Per pacemaker holding cost is $1.75

Set up cost is $300

Ordering cost is $175

Order quantity is 400

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Recommendation for Inventory Ordering

RTLS- Real-Time Location System

Tracking assets, (pacemaker)

Tracking patients (recipient of pacemaker)

CMMS- Computerized Maintenance Management software

utilization and availability of pacemaker

(McClanahan, 2020)

A real-time location system (RTLS), can help hospital facilities professionals track key assets and save time, money and lives. In healthcare industry, RTLSs have two core applications in hospitals: asset tracking and patient tracking, CMMS is software that centralizes maintenance information and facilitates the processes of maintenance operations. It will help optimize the utilization and availability of pacemaker at Vila Health. With advantages comes disadvantages of both RTLS and CMMS. Tracing on all supplies will ne needed in addition to paper record. Any internet interruption will screw the inventory (McClanahan, 2020). Any supply that does not have a bar code can not be traced. Due to structural materials, some areas cannot receive proper internet access rendering limited access which can hinder tracing of the supply.

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Ordering Terms

Quantity to Order

the quantity of pacemakers to be ordered when stock fall to a predetermined minimum level.

Demand Forecasting Formula

the estimate of expected demand during a specified future period

Consignment Purchase Order

The supplies are not paid for until used by healthcare facility

A consignment purchase order is an agreement with a vendor that allows the product to be received, but the inventory still belong to the vendor until the product is used. The product is not received into live inventory and does not have a value assigned to it, but will be displayed as consignment inventory. Payment for the product does not occur until the product has been used. Pricing can be established in the purchase order or at the time that the product is received. 

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Ordering responsibility

Regular review of inventory

Quick responder

Optimizing inventory locations

Strategic use of safety lock

Delegation and assignment of responsibilities

Consequences

Over ordering

Decrease in storage space

Under supply

Patient safety

Leadership

Reviewing inventory as often as every three months even if it is just to confirm that no changes are required. The exact frequency varies based on inventory volatility and velocity. Leaders must respond quickly to inventory discrepancy. Responsiveness starts with inventory visibility and alerts that notify managers of problems that need to be addressed. Identifying optimal inventory locations in today’s dynamic economic environment requires a multi-dimensional approach. Periodic re-slotting exercises improve labor efficiency at the pick face. There will always be a need for safety stock at different points in the supply chain to manage demand volatility. 

Whenever a leader fails to stay on top of inventory, the carry extra cost from over ordering. These are cost from owning, storing, and keeping the I excess items in stock. These excess items take up a lot of storage area leaving a small amount of space for the other supplies. Not keeping proper track of inventory also leads to inadequate supplies which are detrimental to patient safety

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Implications

Increase cost

Inadequate tracking of supplies

Too much/ low ordering

Supply waste

Loss of revenue

Inadequate patient care

Inventory control is vital for effective business operations. It can also come with challenges. It may seem difficult to find the time and resources and developing a complete picture of inventory can be difficult, especially if you have a larger company or multiple inventory locations. Effective inventory Control is vital for any business, from a newly established brand all the way up to Amazon. It allows you to optimize your cash flow and reduce resources spent in inventory control. By using automated inventory control software systems, you can implement a strategy for inventory control that tracks your assets in real-time. Giving you visibility and control over your stock

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Conclusion

2021 will require more pacemaker due to demand

Improve monitoring and ordering or pacemaker

Monitor budget closely to reduce spending cost

Work more efficiently to become financially successful

No matter the industry or the size of your store, inventory control is often an enormous struggle for retailers. If you are understocked, you may lose sales, but if you are overstocked, your cash flow will be tied up. Inventory management is essential for the knowledge of your financial worth. Crucial to every business is the maximizing of inventory investment and being organized and efficient in order to ultimately increase the profit of your business.

Based on the Vila Health pacemaker inventory, 2021 will require more pacemaker due to demand. Leadership must keep a watching eye on the pacemaker inventory by monitoring and communicating the information to the collaborative team. By doing so will save Vila Health some money and also save patient lives.

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References

Das, S. (2020, May 19). Tackling 'right price' of inventory. PRO India.

Dorrell, R. D., Vermillion, S. A., & Clark, C. J. (2017). Feasibility of real-time location systems in monitoring recovery after major abdominal surgery. Surgical Endoscopy, 31(12), 5457-5462.

The Five Best Practices of Inventory Leaders. Retrieved August 04, 2020, from https://www.tbmcg.com/resources/blog/the-five-best-practices-of-inventory-leaders/

Kros, J. F., & Brown, E. C. (2013). Health care operations and supply chain management: Operations, planning, and control. San Francisco, CA: Jossey-Bass.

Kwon, I. W. G., Kim, S. H., & Martin, D. G. (2016). Healthcare supply chain management; strategic areas for quality and financial improvement. Technological Forecasting and Social Change, 113, 422–428.

LaPointe, J. (2019, March 14). Exploring the Role of Supply Chain Management in Healthcare. Retrieved August 04, 2020, from https://revcycleintelligence.com/news/exploring-the-role-of-supply-chain-management-in-healthcare

McClanahan, M. (2020, March 30). What is a CMMS? Computerized Maintenance Management Software. Retrieved August 04, 2020, from https://www.emaint.com/what-is-a-cmms/

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