Effective Inventory Management Process

Inventory management is scientific method of finding out how much stock should be maintained in order to meet the production demands and be able to provide right type of material at right time, in right quantities and at competitive prices APICS Dictionary (1998). Black, C. D,(2004) describes the basic benefits of inventory management to the customer give the required availability of fresh products while to the management as reduced tied-up investment capital on inventory, reduced ordering cost and holding cost associated with warehouse and reduction in the accruing obsolescence of product. Calculating what is known as buffer or safety stock is also key to effective inventory management. Essentially, buffer stock is additional units above

Finished goods: Completed product awaiting shipment and Goods-in-transit to warehouses or customers.

2.2 Inventory Management Process Inventory control process is worked by combining the following five steps: Purchasing, Receiving, Storage, Issue and Report Chungsiwapornpong W. (2007)

i. Purchasing: is the process of acquiring medication based on the stock status. The purpose of purchasing is to find the right product in the right quantity at the right price at the right place from the right supplier. ii. Receiving: Goods arrive in the receiving room and are inspected and entered into stock recording system and receiving reports are prepared. iii. Storage: Accepted goods are moved to their allocated storage positions in the warehouse. Proper storage of inventory is vital while improper storage can cause a product to deficit or minus, resulting in a loss of money and inventory. iv. Issue(Distribution stock from storeroom): items or products kept on store to be moved to the required place when the demand comes. The size of the facility doesn’t change procedure to do this process. The movement and control of stocks are more complex in large facilities. Separate storerooms may be needed to minimize the complexity during

Many companies use some kind of ranking system to classify their materials in the warehouse, such as the ABC classification Ramakrishnan Ramanathan∗(2006). ABC was proposed by Kapland and Cooper in (1998), the first printed in journal of cost management and Harvard business review. After that, this system was accepted and rapid popularity in England and Europe. At the first in Thailand adopted ABC for their organization. For the health care system, ABC is needed because competition in health care is a driving force while efficiency remains serious concern. ABC can deliver the information to maximize resource and to relate cost to performance and outcome measure. Management decision makers can utilize ABC information like, identifying which one is vital, essential or non essential items to accomplish cost efficiency without affected negatively on the quality of service delivery while also assisting continuous quality improvement and give more focus on items of class ‘A’ and ‘B’ Barker J.J.