Zero Inventory concept in Hospital  

Are you looking for an effective inventory management technique for your healthcare organization? Are you aware of the zero inventory concept? In this article Hospaccx Healthcare Consultancy has worked on zero inventory concept an effective inventory management technique for a healthcare organization. 

Introduction: 

Zero inventory is a business strategy where companies aspire to hold little or no on-hand inventory stock. The aim of zero inventory is to order the exact quantity that will be sold, and receipt goods into stock when they are needed. 

This concept is based on the just-in-time inventory approach of short lead times, zero inventory is more effective, flexible, and less expensive than holding and storing large amounts of inventory. Stock is effectively pushed back up the supply chain by the retailer who wants to avoid the risks and cost of holding inventory. 

The zero-inventory approach is not feasible for all enterprises but is perfectly suited to many businesses in today’s technological environment. Most internet-based retailers operate using the zero-inventory model. Implementing this in the healthcare sector will allow us to maximize cash flow by raising the speed and rate of inventory turns.  

Ultimately, a zero-inventory strategy relies on having an efficient supply chain that is completely reliable.

Advantages of zero inventory concept 

• Reduction of cycle time. 
• Reduction of inventories. 
• Avoiding duplications of logistics costs. 
• Increasing customer service. 

Effective management of hospital logistics systems should be based on a clear understanding of the interconnectivity between logistical activities in a hospital logistics system and which demands trade-offs considerations between various logistical decisions.

Implementing a zero-inventory model in the healthcare sector.  

• Use a WMS to manage warehouse operations efficiently and estimate resourcing costs. 

• Change the business emphasis towards more customer-focused. 
• Foster relationships with logistics providers and couriers e.g. 2-man delivery companies who have the capability of delivering a high level of customer service to end consumers 
• Expect to hold a level of just-in-case stocks to counter lead time and understand the minimum level of stock the business must hold to accommodate lead times and sudden peaks in demand. 

Economic significance of Zero Inventory  

• Zero inventory can benefit a healthcare business because there is significant expense associated with possessing it. 

• Inventory reduction can do more to improve ROA (Return on Assets) in healthcare than other factors. For instance, a 50% reduction in inventory will typically account for 10–25% improvement in ROA.

• Hospitals can enjoy the reduced costs that are wasted in storing the goods and can make use of the same for other business activities.  
• Hospitals that take steps along these lines will improve staff efficiency, reduce inventory supply costs, and improve the bottom line.

• Quick response to customer potential demand, through the way of reasonable inventory management and timely delivery.

Methods of Inventory Management 

• ABC analysis 
• Just in time (JIT) inventory method 
• Fast, slow and non-moving (FSN) analysis 
• Economic Order quantity 
• First in First Out (FIFO) and Last in First Out (LIFO)

A typical health care supply chain 

In hospitals, the main Inventory Control Decision involves three fundamental questions 

• How often to review? (the inventory status) 
• When to order? 
• How much to order?  

The answers to the above questions are determined by the inventory control approach used. 

Conclusion: 

Inventory control is undoubtedly one of the biggest challenges in supply chain management and poor forecasting can leave companies with significant funds tied-up in excess stock. However, new technologies provide better inventory control solutions and with a more collaborative approach to supply chain partnerships, there is an alternative to holding large quantities of inventory stock. 

In recent years, health care strategies are directed toward identifying the logistics solutions that will lead to increases in overall customer service levels and reductions in total health care costs. This led to the application of time-based logistics strategies including just-in-time (JIT) 

Are you planning to implement a zero-inventory concept in your healthcare facility? We can help you to adopt the best way to start a zero-inventory concept in your healthcare facility. You can contact us: Hospaccx healthcare business consulting Pvt. Ltd on you can visit our website https://hospaccxconsulting.com/

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