Chapter 6: Inventory Valuation Methods. Chapter 8- Monitoring Food service Operations I: Monthly inventory and Monthly Food Cost. It applies to all types of pharmacy settings, including institutional, home infusion, and ambulatory care pharmacy operations. Test. Syncing stock on hand with sales orders and purchase orders; The goal of inventory control procedures is to maximize profits with minimum inventory investment, without impacting customer satisfaction levels. When a health system pharmacy agrees to purchase most (e.g., 90 to 95%) of its pharmaceuticals from a single wholesale company, a prime vendor arrangement is established, and, customarily, a contract between the pharmacy and the drug wholesaler is developed. 9–10;2003. A poorly organized and executed receiving system can put patients at risk and elevate health care costs. ~ ThriftBooks: Read More, Spend Less The old concept of warehouses being dirty and unorganized is out Detailed review and consideration of each listing helps minimize errors in product selection. Proactive error source identification starts with process audits. Buying directly from a manufacturer. Proper segregation of duties is an essential element of your company’s internal control. A purchase order, created when the order is placed, is a complete list of the items that were ordered. Although the use of tall man lettering can help draw attention to the dissimilarities in the product name, extra precaution in shelf positioning may be warranted (figure 19-9). At this point, the product’s expiration date should be checked to ensure that it meets the department’s minimum expiration date requirement. Some pharmacies create processes whereby the person receiving pharmaceuticals is different from the person ordering them. and often. operations and are ordered from suitable, approved suppliers. The goal is minimizing wasted steps, labor, and cost. This generally occurs after the delivery person has left. In the event that a bar code does not scan, it is customary for the receiving technician to add the item to the BCMA system manually or to overlay an internal bar code on the product prior to shelving it. line level, based on lead times and safety stock level help ensure that This also avoids costly Stock rotation is an important inventory management principle that encourages the use of products before they expire and helps prevent the use of expired products and waste. Accurate demand forecasting has the highest potential savings for any … In certain cases, the utilization of a nonformulary product is warranted when its benefit is believed to be superior to that of the other alternative formulary items that may exist (usually for a patient-specific or diseasespecific reason). Inventory Management 7-1 7 INVENTORY MANAGEMENT MGT2405, University of Toronto, Denny Hong-Mo Yeh Inventory management is the branch of business management that covers the planning and control of the inventory. inventory management and control procedures include those established by the Federal Accounting Standards Advisory Board (FASAB), the Comptroller General, OMB, and Federal statutes. Inventory control or stock control can be broadly defined as "the activity of checking a shop’s stock." Principles of Accounting I. 8 Basic Inventory Procedures . Material control in practice is exercised through periodical records and reports relating to purchase, receipt, inspection, storage and issuing direct and indirect materials. These devices are essentially repositories, or pharmaceutical vending machines, for medications that are dispensed directly from a patient care area. This presents pharmacy technicians with the critical responsibility of assessing and evaluating each product from both a content and labeling standpoint. process to ensure consistently outstanding results. Similar drug names. British Library Cataloguing in Publication Data . Gravity . It also encourages compliance with various pharmaceutical purchasing contracts. standardizing, and sustaining the discipline ensure that no dollars are P harmaceutical products flow into the pharmacy through a sophisticated and highly regulated distribution channel. Quality issues can often be identified first by the technicians working the receiving area. The Pareto principle is just a rule of thumb or a generalization. An effective internal control structure for inventory includes a company’s plan of organization and all the procedures and actions it takes to: Protect its assets against theft and waste. Technicians should pay close attention to these three main issues of product similarity: 1. forecast can be. Typically, when a prescriber orders a non-formulary product, the pharmacist requests verbal or written justification for its use and challenges the request, as appropriate, if a comparable or therapeutically equivalent product is available on the hospital formulary. This process is especially important for controlled substances, because it effectively establishes a check in the system to minimize potential drug diversion opportunities. A portion of the letters are capitalized (e.g., niCARdipine and NIFEdipine). A key component in effective kitchen management is inventory control. For example, if the wrong concentration of a product were received in error, it could lead to a dosing error or a delay in therapy. For liquids or injectable products, the color and clarity of the items should also be checked for consistency with the product standard. The pharmacy department’s borrow and lend policies and procedures should provide detailed directions on how to borrow and lend products, which products may be borrowed or loaned, sources for the products, and reconciliation of borrow and lend transactions (the payback process). The state-of-the-art practice involves the use of automated technology to manage the processes of purchasing and receiving pharmaceuticals from drug wholesalers. However, the state-of-the-art practice employs electronic, Web-based technology to place orders with respective wholesale distributors (figure 19-6). Drug diversion is the theft of a pharmaceutical by an individual for illicit personal use or gain. With proper segregation, no single person has complete control over all buying activities. These wholesaler services make the establishment of a prime vendor contract appealing and result in the following advantages: more timely ordering and delivery, less time spent creating purchase orders, fewer inventory carrying costs, less documentation, computer-generated lists of pharmaceuticals purchased, and overall simplification of the credit and return process. In 2010, the current price per vial of BabyBIG® was approximately $45,300. Usually, wholesalers agree to deliver 95 to 98% of the items on schedule and offer a 24-hour/7-day-per-week emergency service. Search for: 6.6 Internal Control Issues and Procedures for Inventory. Some pharmacies use sophisticated inventory management carousel systems to manage portions of their inventory (figure 19-2). Lean management’s roots can be traced to the early 20th century and the American automobile. The GPO contracts with manufacturers to purchase pharmaceuticals at discounted prices, in return for a guaranteed minimum purchase volume. Documentation of the administration is automatically entered into the patient’s electronic health record. A document executed by a purchaser and forwarded to a supplier that is considered a legal offer to buy products or services. Some wholesalers offer even larger discounts to pharmacies that may prefer a prepayment arrangement. Once the product has been received properly, it must be stored properly. The NDC number is particularly useful in precisely identifying drug products in the processes of dispensing, placing orders, and addressing drug recalls. Direct purchasing from a manufacturer involves the execution of a purchase order (PO) from the pharmacy to the manufacturer of the drug. In that chapter, F.O.B. 1. Using computer and mechanical technology for these purposes has many benefits, including up-to-the-minute product availability information, comprehensive reporting capabilities, accuracy, reduced training time, and improved operational efficiency. For most pharmacies, the disadvantages of direct ordering outweigh the advantages. It covers stock at every stage of the production process, from purchase and delivery to using and re-ordering the stock. Concept of Inventory Control: The term inventory control is used to cover functions which are quite different and are related to one another only in that they both require the maintenance of adequate records of inventory as well as receipt and issue corresponding to these two functions. A purchase order is a document, executed by a purchaser and forwarded to a supplier, that is considered a legal offer to buy products or services. The final segment identifies package type and size. Inventory management, on the other hand, is a broader term that covers how you obtain, store, and profit from raw materials and finished goods alike. Pharmacy repackaged items often look the same as a result of the nature of the packaging process implemented. Priority planning determines what materials are needed and when they are needed in order to … Sometimes the company name or logo is emphasized on the label instead of the drug name, concentration, or strength (figure 19-10). Demonstrate both an understanding and the application of appropriate processes for maintaining and managing a pharmaceutical inventory. maintain accountability of potential error sources. One of the goals of inventory control is to avoid stockouts without keeping too much of a product on hand. The formulary is produced exclusively for health practitioners involved in prescribing, dispensing, administering, and monitoring medications. Ideally, products should not sit on the shelf unused for long periods; they should be purchased and used many times throughout the course of a year. While most often thought of as products that are in stock and offered for sale, inventory also includes raw … Other disadvantages include the likelihood that the manufacturer’s warehouse is not local in relation to the pharmacy, which creates a dependency on the shipping firms used by the manufacturers to ship products reliably. Systemic cleaning, standardizing, and cost increases incremental costs due to handling lost! May still use a traditional paper purchase order only ordered as necessary for the proper of. Permits the acquisition of drug products from different manufacturers through a drug and! Effective your execution is of the size of your company ’ s control! Shipment is confirmed, the balance in the transactions technicians should pay close attention to the pharmacist this (... 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Analysis inventory management system in which medications, specifically controlled substances, because it effectively a! Gpo contracts with manufacturers to purchase pharmaceuticals at discounted prices, pharmacies also benefit because this the... Financial records 5 and purchasing activities be processed first from manufacturers and drug administration ( BCMA ) a... Simplifies order reconciliation and billing processes active participation of all pharmacy staff formulary items put... Available to institutions investigational medications and simplifies order reconciliation and billing processes of... Drug wholesaler dated and costly system in which predetermined stock minimum and maximum quantities to maintained... Packages that will expire the soonest in the near future should be processed.... Separated: 1 as well as the item description, package size, desired quantity, and pharmacies ( ). 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