Chapter 1: Introduction

The basic goals of inventory management are to minimize inventory investment while maintaining a balance in supply and demand that meets
customer expectations (Desselle & Zgarrick, 2009). Exploring and understanding the optimal utilization of inventory is critical to pharmacy
operations (Desselle & Zgarrick, 2009). Healthcare service organizations, such as pharmacies, have lagged behind industrial and retail sectors in
developing and implementing effective process improvement strategies and techniques (Carroll, 2007). Although representatives of pharmacies
and other healthcare service organizations have made significant efforts implementing strategies to improve the delivery and quality of
healthcare products and services, less effort has been spent on actual process improvement. Specifically, the improvement focus of these
organizations has been the end products or services, rather than the actual processes that yield the end products or services (Desselle &
Zgarrick, 2009). Out-of-stock (OOS) events are indicators of inventory process failures in need of improvement (Gruen & Corsten, 2008). An OOS
event refers to an event that occurs when an item is unintentionally not available for sale for a certain contiguous time period (Gruen &
Corsten, 2008). OOS events represent both a failure to meet customer expectations and an inventory control process failure. Inventory control
for this study was defined as the process of minimizing the investment in inventory while balancing supply and demand such that OOS events
are reduced to customer specifications. One protocol designed to improve operational performance and eliminate process defects is Six Sigma.
Six Sigma is a rigorous and focused implementation of data and 2 statistical analysis. Six Sigma involves a simple model known as Define-
MeasureAnalyze-Improve-Control, or DMAIC (Pyzdek & Keller, 2009). This chapter introduces a quantitative case study of OOS rates achieved in
a longterm care pharmacy under differing inventory control systems, with and without the use of Six Sigma. A background is presented to
explain the nature of pharmaceutical products, inventory control, and Six Sigma. The research problem is identified and the research purpose is
then stated, followed by the theoretical framework that guides the study. The research questions and hypotheses are then presented, along
with a discussion of the nature, methodology, and significance of the study and definitions of key terms used.

Introduction There are still in minimum circumstance of pharmacy shop that using the stock inventory system in over the world. Focusing in
Malaysia as a case study, the pharmacist itself still didn't realize the importance and advantages using this system but more rely on manual
procedure merely. The entire pharmacist must keep accurate count of their drugs stock inventory. Therefore, it is critical to know the details of
each drugs and the stock balance must be immediately updated due to any approved transaction. There is several existing pharmacy inventory
system that was widely implemented around the world. For examples is Pharmatrax (Pharmacy Information & Management System). This
system is used to seamlessly combine five distinct functions that are vital to a pharmacy prescription, dispensing, billing, purchasing and
inventory management. Pharmacy stock inventory system (PSIS) module deals with the automation of general workflow and administration
management process of a pharmacy. The main processes of the system focus on customer's request where system able to search the most
appropriate drugs and deliver it to the customers. The PSIS module is equipped with the automated alert features. It able to remind the
pharmacist list of drugs that 2 reached the minimum quantity and also support alert reminder for the expired date for each drugs.

Introduction An organization requires a system which is dedicated to facilitate and expedite the work process to increase efficiency and
productivity of the organization. Tie existence of a good system, systematic and safe requires the management organization to oversee all
information management effectively. A system should be analyzed and designed to ensure future implementation of the system is easily
understand by the end users. Drug Management System :(DMS) IS equipped with the automated alert features. It will remind the administrator
(Pharmacist Officer) about the list of the drug that reached the minimum quantity and it also support reminder for the expired date for each
drug. The web based system which is implementing in DMS is suitable to be used for rural clinic to order the drug through an online system. For
administrator page, admin can access all records related to drug stock and related information in the user equipment to store and update if
there are any changes to the inventory records.

SADSIGN

STI COLLEGE San Fernando

GROUP2BSIT-2C

1.
INTRODUCTION

This chapter presents the background of thestudy, problem and objective, its significance, andscope and limitation of the study.

International Standard Serial Number (ISSN): 2249-6793

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INTRODUCTION

Inventory is defined as an asset acquired and maintained by an entity which are held for sale or as supplies in the business operations.

[1]

It is a comprehensive listing of merchandise or stock on hand, work in progress, raw materials, finished or unfinished goods on hand
.Additionally record is kept of products or services which have not yet been purchased andcan be converted to cash quickly (liquid
assets).Inventory management (inventory control) can be defined as policies, procedures, andtechniquesemployedin maintaining the
optimumnumber or amountof each inventoryitem.The objectiveof inventory managementis to provideuninterrupted production, sales,
and/or customer-servicelevels at the minimum cost. Since, for many firms, inventory is the largestitem in the current assetscategory, inventory
problemscan and do contributeto losses or even business failures.

[2]

The process is primarily used to ensure that assets are properlysecured and there is concurrency among all accounting systems.Inventory
Control is important for pharmacies since inventory is a major investment madetowards the success of the firm, hence adequate management
is essential in assuring securityof the firms single largest asset. It is important as it improves workflowand enhancescustomer satisfaction which
is ultimately the breaking point of the business. EssentialInventory Management (EIM) is vital for the profitability of the Pharmacy, EIM results
in better cash flow, good customer service, good relationship withsuppliers,good return oninvestment and accurate prediction of future needs
of inventory.

[3]

Several types of inventory management exists and overall inventory control systems can beclassified as being; visual, periodic or perceptual
systems despite thefact that they should bedeveloped to suit the specific needs of the pharmacy. The achievements of the firmfrequently
depend on how proficient administrative bodies are at tailoring these methods tosuit individual needs.Based on these facts, we conducted our
study with the following objectives:1)To observe what methodologies are employed for inventory management.2)To determine the most ideal
method of inventory management for pharmacy.3)To determine extent to which inventory management is important for pharmacy
business.4)To investigate whether any inventory control systems are being used in Trinidad
A key decision in retail pharmacy is how much inventory to keep on hand. Inventory is usually a pharmacys largest asset. Once

inventory levels are established, they become an important input to the financial aspect of any business, as they are key to driving

cash flow and profitability.

Too much inventory translates to too little cash and, oftentimes, to less profitability. However, too little inventory can mean lost sales

as patients go to another pharmacy to fill their prescriptions. As a pharmacy owner, you have many facets to consider when

managing your inventory, and certain best practices can drastically improve your bottom line.

Understanding inventory

Inventory decisions involve a delicate balance between three classes of costs: ordering costs, holding costs (also known as carrying

costs) and shortage costs. Ordering costs are the costs associated with placing an order, receiving and verifying the order and

putting away the stock. These costs will largely be composed of personnel time. Holding costs are the costs associated with holding

an item in inventory. These costs will be the opportunity costs of having your cash sit on a shelf instead of in your bank, where it

could be paying down debt, paying bills or paying suppliers faster to receive better discounts. Shortage costs are the costs of

temporary or lost sales due to not having the inventory on hand when the prescription needs to be filled. This cost is the hardest to

quantify, but often the easiest to see.

You can break down inventory into two broad classes: base stock and safety stock. Base stock is the portion of inventory that is

replenished after its sold to customers. Think of base stock as the foundation of your pharmacy from which prescriptions are filled

day in and day out. Safety stock is the portion of inventory that is held to protect against uncertainty. Its that extra bottle that you

keep just in case. The rule of thumb in base stock and safety stock is simple: Keep an adequate supply of base stock and as little

safety stock as possible.

Types of inventory systems

The success of any business depends on the owners ability to maintain adequate records of items sold, items received and items in

inventory. Records provided by an inventory control system should call attention to the need for reorder when necessary or to

eliminate dead wood inventory when needed.

Inventories are typically controlled and supervised by three methods: perpetual inventory control, physical inventory, and looking it

over. The perpetual method is the most frequently used method in our computerized world. In this system, complete data records

are kept on each item of merchandise and additions or subtractions are made with each transaction through the pharmacy operating

system. There is an inventory balance plus a receipt of product, minus the actual sale of product to reflect the quantity on hand. This

is done largely automatically.

Physical inventories, on the other hand, are laborious endeavors that are typically done annually. They are the check that you

need to verify the accuracy of the perpetual inventory on a regular basis.

The looking it over method is the old school method still employed by some pharmacy owners. It is the preferred method for those

who like to think they know their patients, but while they may know their patients, they arent employing inventory best practices.

With this method errors are bound to occur, as are overstock situations. This method also makes it difficult to pinpoint accurate

inventory levels, which typically means the pharmacy is seriously overstocked as most operators err on the side of safety stock.

4 easy inventory improvements

Even a pharmacy that does an average job of managing its inventory can see drastic changes with just a few improvements to

inventory management. Take a look at these ways you can evaluate your operations and make adjustments to improve your return

on sales.

Place fewer orders

Many pharmacy owners today still place several small orders throughout the day. They scan their shelves at the end of the day and

place a final order before locking up in the evening. However, when you place larger orders fewer times throughout the week, you

spend less time preparing orders and putting orders away, which can ultimately save you money. If you place three large orders

throughout the week, for example, and only the occasional must have base stock order, you can organize a more effective work

schedule. With consistent orders, you can plan ahead and place more staff on the days where you will need to put away larger

orders and you can cut back staff hours on other days.

Reduce overall inventory

Get rid of excess safety stock, outdated products and items that are on the shelves but rarely or never move. You should return for

credit anything that hasnt moved in the last 30 days. Then, increase your safety stock on faster moving products to ensure

adequate stock for light order days. This decrease in inventory can increase cash flow and decrease cost of goods sold because

youll be filling the same number of scripts with less inventory. This increased cash flow also means that you can pay your drug

supplier faster and earn even more savings on your cost of goods.

Invest in a better inventory system

When you invest in a computer system that has perpetual inventory management capabilities, youll offset the expense of the new

equipment with the savings youll see in other areas of your business. For example, your payroll expenses will likely decrease

because youll improve your ordering patterns and reduce the hours worked by your staff.

Stop just in time ordering

You might think that just in time ordering is the most efficient form of ordering because it can bring cost savings and reduce

inventory levels. However, this thinking doesnt take into consideration several critical elements. Just in time ordering only works

when you have reliable delivery, reliable supply, and stable, predictable demand.

Meaning, your suppliers will need to have the stock you need at the time you need it with the ability to deliver it to your door. Youll

also need to know who is walking in your door and what they are going to need. Then, your supplier has to have it in stock and

delivered to you in advance of that person walking through the door. Thats a tough combination in retail pharmacy on any given

day. If you use just in time ordering, you probably try to combat these problems by keeping a good amount of safety stock on hand,

but that defeats the theory of the system. Go with a better inventory
What Is The Importance Of Pharmacy Inventory

Management Systems

Pharmacy is one of the largest industries in the UK. This is a kind of field where accurate records are needed all the
time. As the owner of such business you must try to use the latest software programs in your company so that you can
organize your tasks perfectly. You should know about the advanced technologies that can be used to manage your
pharmacy business without any issue. The use of Uk Epos Systems is one such matter. It can help you in different
ways. It ensures the growth of your pharmacy wholesale business within a significantly short time. However, before you
start using the solutions you must be aware of their importance.

Accurate Records Of Stock

Stock management is very crucial in any business. When it comes to the pharmacy industry you cannot expect any new
law. Here also you have to prepare a flawless and up-to-date record of all your products and stock so that you can
manage the business in a better way. The latest inventory management software helps you to keep the current record of
the stock of your business so that you can understand the latest condition of various products. Since the record is
maintained by software thus the chance of making mistakes is almost zero.

Fulfil The Market Demand

You cannot promise the delivery of a good until you know that whether you have that same product in your stock or
not. If you accept the order from your client and then become unsuccessful to deliver the goods then it will affect your
market reputation. Thus, you must check your stock first and then accept the orders. The latest Pharmacy Inventory
Management Systemsmakes it easier for you. You can get information about the stock all the time. You can even set
alerts for dead stock so that you can fill it up again and fulfil the market demand in a consistent manner.

Save Your Time

Irrespective of the nature of business you should try to have solutions that can save your time. The Pharmacy
Management Software is always ready to save your time. The software can perform big and complicated tasks
within few minutes in a simple manner. That is the reason you can always save your time and do not need to get
worried about keeping the records of your stock. You can rather invest that time in something constructive or more
vital in business. The software reduces the rate of errors and that makes your business more successful.

Get Trouble-Free Business

When everything is smooth and easy in your business, then you can enjoy a trouble-free time. You can keep the track of
your products easily. You are completely aware of the sales report. You are getting alerts for your dead stock and have
enough time to fill them up. You can update your prices as per the requirements. That means you can perform all the
vital tasks in business effortlessly when you use this latest software. This is definitely a great thing that you can expect
from a software solution.
The Importance of Effective Inventory Management
January 27, 2016
Effective inventory management is important regardless of the type of business you are
running. From retail stores to healthcare facilities, it is important to have inventory
management solutions in place that impact your business in a positive way. If you are not
currently utilizing an inventory management system, it could be costing you quite a bit of
money. Keeping track of how much of each item you have in stock can not only impact you
financially but it could also cost you your business.

When it comes to inventory management solutions, Quality Inventory Services is one of the
best in the business. They are specialists in University and public hospital systems and can
help keep track of your retail or healthcare-related inventory. Since 1976, QIS has been
providing the most accurate inventory management solutions available. This team of
experts knows exactly why inventory management is so important. Do you?

Inventory Balance and Turnover

Great inventory management will help you to figure out how much of what item of inventory
that you need. This makes it much easier when it comes to product shortages. It also helps
you to keep the right amount of inventory in supply without having too much in stock. You
also need to keep track of your turnover ratio in order to make sure your items are not
expiring or taking up your working capital.

Inventory Orders and Tracking

If you and your staff have kept good track of how much inventory you have in stock then
you can make wiser decisions when it comes to what you will need to order. When you an
excellent inventory management system in place, you can avoid ordering too much or too
little of a product. It can also help you to track how much inventory you have each location,
if you have multiple locations, that is.

Saves Money

If your company is efficient when it comes to your inventory solutions then you can
potentially save quite a bit of money. You will not have to worry about wasting money on
products you dont need or having too much of a product in stock. You can then invest the
money in other areas of your business.

These are just a few of the reasons why having effective inventory solutions in place will
make a big difference when it comes to running your business in the most efficient way
possible.

Quality Inventory Services provides high quality inventory management solutions for retail
and healthcare organizations. Visit their website to find out more. Visit Qiskc.com for more
information.

You can also like us on Facebook for frequent updates.

The objective of an inventory control system is to make inventory decisions that
minimize the total cost of inventory. This is not to be confused with minimizing
inventory. It is often more expensive in a pharmacy to run out of an item than to simply
keep more units in stock. For example, in a retail pharmacy, if a customer is unable to
obtain their medication, they may go somewhere else and the pharmacy may lose future
purchases. In a hospital pharmacy, if you run out of an item, you might be required to
obtain it by a more expensive method (over-night delivery, hot-shot, ect.).
Most pharmacy inventory decisions involve replenishment how much to order
and when to order. In this course we will look at several models for minimizing the total
cost of inventory, including the popular method of Economic Order Quantity (EOQ).
This particular method attempts to balance the carrying cost inventory with the cost of
running out. As we look at each of the inventory control models, it is important to keep
in mind the different types of cost associated with pharmacy inventory: (1) carrying costs,
(2) shortage costs, and (3) replenishment costs. Each of these costs is discussed later in
the course.
Many of the models we will discuss make certain assumptions that do not hold
within the operations of a hospital pharmacy. For instance, the costs associated with
running out of a drug product used in critical care might involve increased morbidity and
mortality, which is not an acceptable situation. Given that, the basic concepts of these
inventory control models can be applied to hospital pharmacies when appropriate.

Handling stocks in every organization is an important issue in every business. A well-structured inventory
system would give the organization proper control of their stocks.
This study will be using the input-process-output diagram to come up with an enhanced pharmacy
inventory control system for MDC.

Input. The first variable is the current pharmacy inventory control system of MDC as provided based on
interviews and observations by the researchers. It will include policies and procedures provided by the
management currently implemented for purchasing, receiving, storage, issuing and reporting of
inventory.

Process. After identifying the inputs, the current pharmacy inventory control system of MDC will be
evaluated using the SWOT analysis. After the strengths and weaknesses of the current system are
identified, the enhancement of the current pharmacy inventory control system of MDC will follow. During
this phase, management and accounting theories, concepts, and techniques will be followed
to enhance the current system. Also, the organizational requirements of MDC will be taken into
consideration for the enhancement. Before the final output, feedback from the management will be taken
for comments and suggestions to be added for the final output.

Output. The output will be the result of the careful analysis and discussion of the researchers and the
clients management. The output will be an enhanced pharmacy inventory system for MDC to be
recommended for the client.

Inventory is basically the total amount of materials held in stocks by a store, factory and

business. An inventory management system is a process by which keep track to the goods and

materials whether it status is available and unavailable and the total sales of the company at the

end of the day. Normally the count of materials and total sales can be done manually at the end
of the day. In this way of procedure it is possible to keep the record of materials coming to the

business company and material being sold.

Since sales and inventory can be done in manual process practically it consume a lot of

time and is prone to a lot of errors. It would be helpful to build a system that will computerize the

transaction, keep the records in database, update the total amount of stock available, and notify

if there is stocks that will be expire and already expired. The computerized inventory management

system will help and improve employees work by computerizing routinely and time consuming

task such as the task that they spent in taking down the information of product. As a result the

time can be used in more production activities.