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    3 Myths About Hospital Inventory Management

    Posted by: Jean-Philippe Racette | November 26, 2018

    Health systems looking to control costs while strengthening patient care often struggle to bring lasting change to hospital supply chains with complex requirements.

    When it comes to automated, point-of-use hospital inventory management systems, there are several myths that often delay adoption for many organizations. However, these powerful solutions can revolutionize how inventory is managed, from seamless supply documentation and UDI capture to reductions in wasted time and effort.

    Myths About Hospital Inventory Management

    Myth 1: It Only Makes Sense for Large-Scale Rollouts

    Healthcare organizations often think about new software in terms of massive, highly disruptive system rollouts, perhaps due to their experience introducing and integrating an ERP or EHR system network-wide. The truth is, implementing a point-of-use (POU) inventory management system can be incredibly effective for every facility whether it’s large or small. This is because these systems can provide important financial gains quickly and help better manage costs without a long deployment process.

    At a high level, a point-of-use system has to make sense financially, meaning there’s measurable ROI generated through optimized inventory and reduced expenses and waste. For example, having the right inventory on hand minimizes the chance of procedures being delayed or cancelled because required items are missing.

    Furthering Lean Practices

    Over the years many organizations have embraced Lean concepts to improve the quality of care and reduce costs using optimized processes and product flow. A robust point-of-use system can help accelerate the adoption of Lean practices by automating the approach/processes in place and facilitating continual optimization and error elimination. Point-of-use automation makes Lean improvements sustainable.

    Key Point

    During the planning for each phase of your point-of-use deployment project, target the highest consumers of medical supplies such as specialty areas (OR and Cath Labs) and intensive care units. Focusing on these departments first will maximize the ROI and the gains generated.

    In fact, one standalone, 300-bed hospital in the U.S. implemented automated data capture at the point of use and generated a compelling ROI, proving that you don’t have to be a big IDN or university hospital for a POU project to make sense. The key was to first target the most critical areas consuming a significant volume of supplies to generate a fast return on investment as well as benefits that made rolling the system out to remaining areas a welcome project.

    The consumption volume and the value of inventory of every location should be evaluated to define the right mix of automation technology and which processes to optimize. Ensure the system can evolve over time and will offer differentiated replenishment practices and data capture technologies depending on the supply type, process cost, and clinical involvement required.

    Read this case study on a standalone hospital that drove ROI by addressing the POU: Concord Hospital sees performance boost at the point-of-use

    Myth 2: Clinical Always Fails

    For any point-of-use project to be successful, clinical buy-in is key. The number one concern with investing in point-of-use technology is the compliance risk. Many clinicians associate POU systems with decades-old dispensing cabinets that require too many steps to pick and return supplies—and result in inventory tracking errors that negatively affect compliance. This risk of poor tracking for high-value items or supplies requiring tight chain-of-custody documentation makes staff members understandably resistant to trying something new. Furthermore, there is a perception that any additional involvement of clinical staff in data capture to trigger demand will be rejected or have inconsistent compliance.

    Having clinical leadership involvement early in the project is the only way it will be successful and result in both a seamless implementation and long-term usage. Once leaders understand the goal and benefits of truly effective point-of-use hospital inventory management in clinical areas, they can fully support the project both financially and by ensuring accountability for various aspects of the system rollout and adoption.

    Understanding the Benefits

    Point-of-use automation represents a significant opportunity to improve workflows and release valuable clinical time by addressing the following problems:

    • Time spent traveling, searching for, and collecting supplies: Clinical personnel are accustomed to making frequent trips between stock locations and nursing units to find missing products. They not only waste time walking to far-flung storage areas, but they also lose valuable minutes digging around disorganized stores in their efforts to retrieve the right supplies.
    • Frequent stockouts and urgent orders: The cost of correcting disruptive stockouts is high in terms of the time spent both searching for missing products and paying for urgent, expedited orders. Likewise, if products needed for a procedure are unavailable, the treatment could be delayed or cancelled, putting the patient at risk and affecting financials.
    • Cumbersome supplies documentation and UDI capture: Clinical personnel spend an inordinate amount of time checking expiration dates and manually entering lot numbers, UDI data, and patient file information as well as documenting the usage of implants. The burden of these manual processes lowers productivity and increases the risk of human error, both of which negatively affect the bottom line.
    • Clinical involvement in replenishment activities: It has been observed and documented that clinical involvement in supply chain activities is extensive and increasing, and ineffective workflows are a common byproduct. The management of specialty items, especially one-time use products and trials, represent a challenge for the clinical personnel who are spending too much time manually requisitioning supply needs and reconciling invoices.

    Key Point

    To gain clinical adoption, the point-of-use inventory management system must prove it is flexible enough to manage varied user workflows and minimize clinical disruption. In this way it can maximize data capture compliance and sustain data integrity over time.

    As an example, a two-bin/Kanban inventory management practice reduces stockouts by 90 percent when moving from a par-level practice that generates error-prone demand assessments. Two-bin/Kanban requires just one demand trigger per nurse per shift, taking just seconds to complete versus all the time required to manage disruptive stockouts. It’s the ability to achieve this level of significant benefit that will drive clinical adoption.

    Learn more on the value of clinical involvement in supply chain initiatives: 5 Perspectives on the Clinically Integrated Supply Chain

    Myth 3: The ERP Can Do It All

    Many organizations implement an ERP with the idea that it can address multiple pain points throughout the organization. But these ubiquitous applications are far from a technology panacea. First and foremost, ERPs deliver a strong financial backbone with robust functionality for purchasing and HR.

    Supply chain functionality is simply a byproduct that feeds the financials. ERPs typically fall short of providing the appropriate level of inventory management, demand forecasting, and point-of-care functionality needed to meet the advanced supply chain requirements of today’s health systems.


    At a high level, ERPs typically cannot provide complete visibility for multiple inventory locations in a hospital or across the wide variety of products used throughout an IDN. In addition, they cannot provide a real-time overview of actual consumption. An ERP system will never be able to manage what’s happening in the Cath Lab, OR, or other procedural area when it comes to effective data capture. It simply can’t address the specific needs of these varied environments at the point of use. This makes ERPs ineffective not only for the materials management team, but also for the clinical staff that needs to integrate their activities with supply chain requirements.

    Key Point

    A good point-of-use system will bridge the gap between clinical and supply chain. This goes a long way toward building an integration between the two groups with a focus on better managing both inventory and the overall supply chain. This system focuses on data capture, which is key at the point of use to automate and improve logistic processes, provide real-time visibility of demand, and release clinical staff from manual, inventory-related activities.

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