12.08.2025 Dr. Amrita Ghosh_Stocks Standards_ Smart_Inventory Management_GCLP MMC&H.ppt

Stocks & Standards:
Stocks & Standards:
Smart Inventory
Smart Inventory
Management
Management
GCLP Workshop
GCLP Workshop

• Hello! I am Dr. Amrita Ghosh
• Assistant Professor, Department of Biochemistry
• and Member MEU
• Midnapore Medical College and Hospital
• I am here to give this presentations
• You can find me at amritaghosh1973@yahoo.com
2

Disclaimer
The presenter has incorporated resources from
national and international archives exclusively
for capacity building of healthcare professionals
benefit of the mankind to reduce morbidity,
disability and mortality

Learning objectives
At the end of this session
the learners will be able to internalize
the role of Inventory Management
as the integral part of
Good Clinical Laboratory Practice

NMC and GCLP
• NMC GCLP refers to application and implementation
of GCLP guidelines within the context of the National
Medical Commission's oversight of medical education
and clinical research in India
• CBME stresses on the importance of quality control
and assurance in diagnostic laboratories
• PG students to be competent in laboratory medicine
including setting up & supervising labs, ensuring quality
to provide reliable healthcare support

Directive on integrity
of Clinical data in
research

ICMR and GCLP
08/16/25 7
Dr. Amrita Ghosh GCLP MMC&H
13.08.2025 Smart Inventory

Smart Inventory:
Smart Inventory:
Contents
Contents
• Prologue
Prologue
• Inventory
Inventory
• Standards of items
Standards of items
• Stocks
Stocks and
and Ordering
Ordering
08/16/25 Dr. Amrita Ghosh GCLP MMC&H
8

Smart Inventory:
Smart Inventory:
Contents
Contents
• Prologue
Prologue
• Inventory
Inventory
Standards of items
• Stocks
Stocks and
and Ordering
Ordering
• Procedural issues
Procedural issues
9

Being unaware of
unknown enemy be
fatal
Stock-outs and Sub-
Standards embedded in
empirical mindset are
unknown enemies of labs
Smart Inventory
Management - Science and
Art to fit to adjust task, and
equipment with inputs
08/16/25 10

Smart Inventory:
Smart Inventory:
Contents
Contents
•Understand the principles of laboratory
inventory management
• Learn best inventory practices can be aligned
with GCLP
• Align inventory processes with ISO 15189:2022
standards
• Ensure traceability, reliability, and
regulatory compliance
11

Team approach in lab
Team approach in lab
Properly applied to workplace
environment and tasks,
efficient inventory promote
quality and quantity of
outcome-ultimately contribute
to achievement of
organizational goals
08/16/25 12

Crisis management
Crisis management
13

Right
Right is the key word to
is the key word to
Qc and inventory
Qc and inventory
• Right Item
• Right Quality
• Right Quantity
• Right Time
• Right Price
08/16/25 14
• Ensures uninterrupted testing and
diagnosis
• Minimizes waste and prevents stock-
outs
• Supports cost control
• Ensures reagent traceability and
accountability
• Promotes staff efficiency and patient
safety

Smart Inventory:
Smart Inventory:
Contents
Contents
• Prologue
Prologue
• Inventory
Inventory
Standards of items
• Stocks
Stocks and
and Ordering
Ordering
Procedural issues
15

16

Back to basics
• Webster's has defined Inventory as “Quantity
of goods or the materials on hand”
Inventory Categories
 Reagents and Kits
 Calibrators and Controls
 Consumables (e.g., pipette tips, tubes)
 Equipment and spare parts
 Chemicals and standards
 Reference materials
08/16/25 17

Inventory Positions in the
Supply Chain
Smart
Inventory
Process
Management
Finished
Products
Customer
Satisfaction
08/16/25 18

Nature of Inventory
• Quality - inventory = “buffer” against poor
quality
• Speed - location of inventory has gigantic
effect on speed
• Flexibility – location and level of anticipatory
inventory both have effects
• Cost –
Direct: procurement, delivery, process
Indirect: holding, stock-out
08/16/25 19

Inventory :
Objectives and Components
• To maintain a optimum size of
inventories of raw material and
work in progress for efficient
and smooth reports .
• Minimum investment in
inventories to maximize
profitability.
08/16/25 20
•Inventory master log
• Unique ID and labeling
• Barcode-based tracking
(preferred)
• Alert systems for low
stock and expiry
• User access control and
documentation

Why to learn
Inventory Management
• Improve customer service
• Economies of purchasing
• Quality of output
• Transportation savings
• Hedge against unplanned shocks
• Maintain liberty of supply chain
08/16/25 21

Procurement and Receiving
Pre-approved vendor list & regular updatation
Verification upon delivery – Quality & Quantity
Recording lot number, expiry, COA
Initial QC (if applicable)
Quarantine until approval
22

Ordering/ Reordering
Issuing
Storing
Receiving
Should be guided by
SOPs
and based on
accurate
stock records
08/16/25 23

Inventory control: Issues
Method of maintaining stock at a level at
which purchasing and stocking costs are
lowest possible without interference with the
process
Vital role in maintaining balance between
two.
The risk of the Out-Of-Stock is avoided.
24

• Amounts of locking up of the money which
could be spent more gainfully in other ways.
• Large stock imply a large storing space
and require staffs to store and handle
various items
• Danger of the reagents and chemicals not
being utilized before the date of expiry,
pilferage, good stock lost some sight and
not being utilized, better and cheaper
substitute available over time later
25

 It is generally accepted that total yearly
carrying cost on the inventory is 20-25%.
 Thus inventory control has the objective
of maintaining optimum stock- neither
excessive nor likely to be exhausted.
 Following are the various methods to
store the items based on their cost and
utility.
26

Smart Inventory:
Smart Inventory:
Contents
Contents
• Prologue
Prologue
• Inventory
Inventory
Standards of items
• Stocks
Stocks and
and Ordering
Ordering
Procedural issues
27

A B C Analysis of the items
 ABC analysis categorize inventory in three
groups based on annual cumulative price
 First the list of items showing expenditure
incurred in previous completed year is
prepared
 Then items are arranged in descending
order of amount of expenditure.
 Then cumulative cost of items is calculated
beginning from first item of list to last item.
28

A B C Analysis of the items
29
10% consuming
70% of budget
20% items
20% of budget
70%items
10% of budget

A B C Analysis
 About 10% of items seen to consume 70% of
budget, and these are called Group A Items.
 Group B Item form about 20% of the total item
and account for the 20% of the budget.
 Group C consists of the remaining 70% of the
items consume only 10% of the budget.
 Category A: high priority and managerial
attention - though constitute only small
fraction of total list - amounts for bulk of the
expenditure. Their stock, consumption,
purchase should be critically watched and
controlled.
30

V E D Analysis of items
VED classification of items or materials
group them according to criticality in patient
care.
VED analysis categorize inventory based
on value and utility
“V” Items = Vital items, without
alternatives, forming about 10% of the total
items whose absence cannot be tolerated.
Every attempt is to be made, at whatever
cost, to avoid Out-Of-Stock position of “V”
items.
31

V E D Analysis
“E” Items = Essential items that constitute
40% of items and their absence can be
tolerated for short stretch of time.
They could be made available in a day or
two or alternative item can be made
available.
“D” items = Desirable items - remaining
50% of the items and their non- availability
can be tolerated for longer period.
They may be required in less serious
process.
32

Combination of ABC and VED
Analysis
V E D
A AV AE AD Category I 15% Items
B BV BE BD Category II 40% Items
C CV CE CD Category III 45%
Items
08/16/25 33

H M L Analysis of the items
 The Items are classified according to High
Cost, Medium Cost and Low Cost
 HML analysis categorize inventory based
on Cost and Criticality of non consumable
items also
34

H M L Analysis
 Coupling Matrix Module with
VED.
35
V E D
H Defibrilator X-ray Machine Air Curtain
M Ventilator Electric cautry USG machine
L Oxygen
regulator
Patient trolley Electronic BP
apparatus

S D E Analysis
 In situation where scarcity of items is not
uncommon SDE Analysis is helpful.
 “S” refers to Scarce items which are known to
be in short supply because of various reasons
 “D” items are Difficult items - difficult to
obtain in adequate quantity or quality
immediately.
 “E” items are Easily available items – no
difficulty experienced in procurement.
 SDE Analysis helps to avoid Out-OF-Stock
position of items by management with
reference to their free availability
36

F S N Analysis
 In FSN analysis quantity & rate of
consumption is studied and categorized
accordingly
 F Items are fast moving items that have
large consumption
S Item are slow moving item that have
medium consumption
N Item are non-moving items that have small
consumption
FSN analysis categorize inventory based on
usage pattern of items in process evaluation
37

F S N Analysis
Non moving items which are in stock and
not consumed over a long period lock-up
space and fund and may have to be
condemned because of time barred or
obsolete.
“N” items are to be identified and
disposed off and care to be taken not to order
ordinarily.
Reason for their non-utilization need study
Big hospitals notice 10-15% of items as
“N” items consuming price and space
38

Smart Inventory:
Smart Inventory:
Contents
Contents
• Prologue
Prologue
• Inventory
Inventory
Standards of items
• Stocks
Stocks and
and Ordering
Ordering
Procedural issues
39

40

Empirical/Traditional/Popular
methods of ordering
 1) Two Bin system: Orders not placed at fixed
periods but are placed when the stock of the
item reaches a certain predetermined level
• 2) Cyclical System:-Stock of various items are
checked with certain periodicity to find out
the consumption pattern and the balance in
hand so as to place order to bring up the stock
to the desired level.
In this periodic ordering system, inventories are
regulated by quantities ordered each time,
period between the order remain the same.
41

For fixing level we need to know
1) Lead Time: Average interval between
placing order for supply of items & actual
receipt of the material for use.
Further classified into
a) Internal lead time:- Time gap between
start of preparation of demand of material to
time of dispatch of order.
b) External lead time:- Time from dispatch
of indent to the receipt of the supplies
c) Total lead time= ILT+ELT
42

2) Minimum order level:- This is quantity
of material derived by calculating average
daily consumption of the material and
multiplied by total lead time
viz. Average daily consumption of 5%
dextrose is 50 bottles and total Lead Time is
30 days, then Minimum Order Level is 1500
bottles. Average daily consumption x Total
Lead Time
If you have less then that then we are
bound to face Stock-Out condition.
43

 3) Buffer Stock:- In addition to the
minimum order level we need to have
something in extra to meet out any form
of exigency.
 Buffer is calculated by the formula:
 Buffer Stock= (Maximum daily
consumption- average daily consumption)
x Total Lead Time.
08/16/25 44

 4) Reorder level:- This is the point where
we have to place the order for
procurement for replenishing the stock
derived by the formula
• (Minimum Order Level+ Buffer Stock)
 5) Maximum Order Level:-this is the
maximum quantity of the material to be
stocked, beyond which the item must not
be in inventory.
45

Storage and Handling
Store per manufacturer’s conditions
(temperature, light, humidity)
Label with received/expiry/opening date
FIFO/FEFO/LIFO system
Periodic inspection for integrity
Cold-chain monitoring (if applicable)
46

Smart Inventory:
Smart Inventory:
Contents
Contents
• Prologue
Prologue
• Inventory
Inventory
Standards of items
• Stocks
Stocks and
and Ordering
Ordering
Procedural issues
47

Usage and Tracking
• Usage logs per department/test
• Record of use: who, what, when, which purpose
• Daily/weekly reconciliation (manual/ automated)
• Integration with LIMS (if possible)
48

Procedure of issue
In big institutions the indents are to be made
on the basis of the written indents, received
from competent personal.
In tertiary care or bigger healthcare
institutions different tailor-made methods are
used.
A) direct supply to the labs (Central lab and
departmental labs from main institutional stores
B) one more step in distribution is to include a
Decentralized departmental stores or Sub stores
for consumable and non-consumable items etc.
49

FIFO
“FIFO” i.e. “First In First Out” principal
followed
This means that the store is to be arranged
in such a way that all the items which were
received earlier are to issued out first.
This method has to be used to prevent the
non-use of the earlier stock, which may get
time-barred and may have to be condemned.
A simple method followed is to keep the
newly arrived stock on the shelf at the back so
that the older supply/stock can be used first.
50

FEFO
• “First Expired, First Out” - specifically for
perishable goods
• FEFO method ensures that expired items are
sold or used first - minimizes usage risk of
outdated products and reduce waste
• WHO Technical Report Series 1025, 2020):
“Materials and health products should be stored
in ways that assure maintenance of their quality
• Rotating stock should be done properly - best
to adhere to “first expired/first out” (FEFO) rule.”
51

LIFO
• LIFO Principle stands for “Last In, First Out,”
meaning that last item stored in a warehouse
store will be the first item to be sold or used.
• LIFO can be useful in inventory management
for items with short shelf life/non-consumables
- helps to reduce usage risk of products
52

FIFO vs. FEFO vs. LIFO
53

FIFO vs. FEFO vs. LIFO
54

Zero Inventory!
• Reducing amounts of raw materials and
purchased parts and sub-assemblies by
having suppliers deliver them directly.
• Reducing the amount of works-in process by
using just-in-time production.
• Reducing the amount of finished goods by
shipping to markets as soon as possible
• Every subsystem primed that which item at
what quantity, where and when it is required.
• Exactly at the time of requirement - supplied
to the user unit without delay
08/16/25 55

JIT Technique
Taichi Ohno of Toyota is considered as father
of JIT Technique (Just-In-Time Technique).
JIT emphasizes that the inventories are result
of faulty technique used at various levels and we
have to analyze these faults and treat the same.
JIT philosophy promotes - instead of
acquiring inventories; there should be perfect
coordination among different subsystem of
material management like that from level of
demand estimation to distributors to the level
of users
56

Holding costs
Holding costs
• Holding cost (Syn. Carrying cost): total
expenses associated with store and maintain
unsold inventory over a period of time.
• These costs can significantly impact a
business's profitability and cash flow, and
understanding them is crucial for effective
inventory management.
57

Holding costs:
Key components
• Storage Costs:
Rent for warehouse space, utilities (electricity,
heating, etc.), property taxes, and insurance
for storage facility.
• Capital Costs:
Cost of capital tied up in inventory, including
the opportunity cost of not using that capital
for other investments.
• Insurance Costs:
Costs related with insuring inventory against
damage, theft, or other potential losses.
58

Holding costs:
Key components
• Obsolescence and Shrinkage Costs:
Costs of items becoming obsolete/outdated or
experiencing spoilage, damage, or theft.
• Labor and Security Costs:
Expenses of personnel involved in managing &
handling inventory, plus security measures.
• Taxes:
Costs associated with inventory related taxes.
• Handling Costs:
Costs related with moving inventory viz.
loading and unloading.
59

Holding costs:
Why to learn
• Profitability:
High holding cost erode profit margins, specially with
slow-moving or perishable inventory.
• Cash Flow:
Holding costs tie up cash that could be used for other
business operations or investments.
• Inventory Management:
Knowing holding costs optimize inventory level,
reduce waste, improve overall efficiency.
• Strategic Decision-Making:
It informs decisions about pricing, production, and
sourcing strategies.
08/16/25 60

Holding costs:
How to calculate
• Identify Components:
List all the costs associated with holding
inventory (storage, capital, insurance, etc.).
• Calculate Annual Costs:
Determine annual cost for each component.
• Find Average Inventory Value:
Calculate average value of inventory held during
the period.
• Calculate Percentage:
Divide the total annual holding cost by average
inventory value & express it as a percentage.
61

Holding costs: Component
• Storage Costs
• Labour Costs
• Insurance
• Depreciation
• Opportunity Costs
• Shrinkage
08/16/25 62

Holding costs:
How to manage
• Optimize Storage Space
• Implement Just-in-Time (JIT) Inventory
• Negotiate Favorable Terms
• Utilize Technology
• Demand Forecasting
• Monitor and Analyze
08/16/25 63

Holding costs:
How to calculate
• Example: Let's say a company has
Rs100,000 worth of inventory on average, and
its annual holding costs (storage, insurance,
etc.) are Rs20,000. Holding cost percent
is(Rs20,000 / Rs100,000) *100 = 20%
• To sum up:
Holding costs are a crucial and hidden factor
in inventory management that affect overall
business profitability.
64

Economic Order
Economic Order
Quantity (EOQ)
Quantity (EOQ)
• Formula used in inventory management to
determine optimal order quantity that
minimizes total inventory costs, specifically
costs of ordering and holding items
• Helps businesses find “Sweet spot" between
ordering enough inventory to meet demand
and avoiding excess stock that leads to higher
storage and other holding costs.
08/16/25 65

Holding costs:
Syn. Carrying costs
• High holding costs significantly reduce profit
while efficient management of these costs
improve profit and overall performance.
08/16/25 66

Economic Order Quantity
EOQ
• Key Components and Concepts:
• Ordering Costs: Costs associated with
placing an order (e.g., processing costs,
transportation, inspection).
• Holding Costs: Costs of storing inventory
(e.g. storage space, insurance, obsolescence)
• Annual Demand: Total quantity of a product
expected to be used or sold in a year.
08/16/25 67

Economic Order Quantity
EOQ
• EOQ Formula: Standard EOQ formula :
EOQ = √{(2 * D * S) / H},
where:
• D = Annual Demand
• S = Ordering Cost per order
• H = Holding Cost per unit per year.
08/16/25 68

EOQ: Why to learn
• Cost Minimization:
EOQ helps businesses minimize total cost of
inventory by balance of ordering & holding cost
• Efficient Inventory Management:
Provides framework to determine optimal order
sizes-prevent stock-outs and excess inventory
• Improved Cash Flow:
Reduce inventory excess - free up capital
• Enhanced Customer Satisfaction:
Ensure adequate inventory for better order
fulfilment and increased end-user satisfaction
08/16/25 69

MHP –
• MHP– A Porsche Company, a consulting firm
specializing in digital transformation, including
inventory management solutions.
• Help businesses integrate systems like SAP
Digital Manufacturing Cloud (SAP DM) to
optimize inventory planning and automate
manufacturing processes.
• MHP's expertise built hybrid enterprise
architectures, combined on-premise systems +
cloud-based solutions to improve transparency
and efficiency in inventory management.
08/16/25 71

Expiry and Disposal
Timely identification of expiring items
Quarantine and document expired items
Biomedical Waste (BMW) guidelines for
disposal
Root cause analysis for wastage
72

Calibration and Maintenance
Supplies
oTrack calibration reagents and reference
standards
oEnsure traceability of materials used for
equipment validation
oRetain certificates and validation logs
73

Documentation & Record Keeping
Inventory logbook or software
Reagent usage forms
Maintenance and calibration records
Audit trail for each item
Retention period policy (minimum 2 yrs typical)
74

Internal Audit and Review
• Periodic inventory audits
• Discrepancy reporting and corrective action
• Management review inputs
• Audit trails aligned with ISO 15189 Clause 8.9
75

Common Pitfalls and How to
Avoid
Overstocking → Forecast better using
consumption data
 Expiry loss → Implement alerts & FEFO system
Lack of traceability → Use barcode/LIMS
 Poor documentation → Staff training and SOP
enforcement
76

Summary
Inventory is a core part of lab quality & safety
ISO 15189:2022 demands traceability,
documentation, and control
A well-maintained system reduces errors,
costs, and improves patient outcomes
77

Take-home Message
“What isn’t tracked, can’t be improved”
78

79
Attempt is futile to
fit elephant in our
room
79
I have humbly
tried our level
best to
initiate
mammoth
discussion and
accommodate
all issues in
today’s
session of
GCLP CME

Thank You
Thank You
80
Midnapore Medical College and Hospital under the
Midnapore Medical College and Hospital under the
aegis of West Bengal Medical Education Services and
aegis of West Bengal Medical Education Services and
West Bengal University of Health Sciences
West Bengal University of Health Sciences

81

12.08.2025 Dr. Amrita Ghosh_Stocks Standards_ Smart_Inventory Management_GCLP MMC&H.ppt

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