Terms in this set (19) Actual purchase price method. PLAY. As a result, the balance in the … inventory management and control procedures include those established by the Federal Accounting Standards Advisory Board (FASAB), the Comptroller General, OMB, and Federal statutes. Quality issues can often be identified first by the technicians working the receiving area. It helps the technician become familiar with formulary items. 3. Purchasing from a drug wholesaler permits the acquisition of drug products from different manufacturers through a single vendor. The technician can also identify packages that are received containing broken tablets, defective seals, etc., so that the wholesaler/shipper can be alerted to weaknesses in the delivery system. Marketing Essentials Chapter 24, Section 24.1 . The use of products that are not on the official hospital formulary is considered non-formulary drug use. Inventory management principles 1. metrics used in evaluating how effective your execution is of the Just as checking the product label carefully when a prescription or medication order is filled is important, taking the same care when receiving pharmaceuticals and accurately placing them in their storage location are essential. This FDA Drug Registration and Listing System (DRLS) is a database that utilizes a unique identification number, called the National Drug Code (or NDC number), to identify drug products that are intended for human consumption or use. A process in which the nurse scans a bar code on a patient’s ID band and the bar code specific to the medication prior to medication administration. These totes are also environmentally friendly; they are returned to the wholesaler for cleaning and reuse. It is important for pharmacy technicians to understand how the formulary is updated and, how and when changes to the formulary are communicated to the staff. At this point, the product’s expiration date should be checked to ensure that it meets the department’s minimum expiration date requirement. Some institutions also indicate the actual or relative cost of a given item. Demonstrate both an understanding and the application of appropriate processes for maintaining and managing a pharmaceutical inventory. lost to poor processes. One of the key methods of maintaining accurate inventory is cycle These products generally require unique control or storage conditions and may be very costly, relative to others. Products with visible particles, an unusual appearance, or a broken seal should be reported to the pharmacist. The shipper is responsible for taking measures to ensure that the cold storage environment is maintained during the shipment process and generally packages these items in a shippable foam cooler that includes frozen cold packs to keep products at the correct storage temperature during shipment. Sorting, setting order, systemic cleaning, Checklist for Internal Inventory Controls. Attachment 9-1 contains a list of definitions relating to inventory. 1. These machines generally are networked via a dedicated computer file server within the facility, and they allow both unit-dose and bulk pharmaceuticals to be stocked securely on a given patient care unit location. Often, in more particular settings, it simply isn’t spot on. While most often thought of as products that are in stock and offered for sale, inventory also includes raw … Stock control, otherwise known as inventory control, is used to show how much stock you have at any one time, and how you keep track of it. But, F.O.B. British Library Cataloguing in Publication Data . Some pharmacies create processes whereby the person receiving pharmaceuticals is different from the person ordering them. of the cornerstone principles of inventory management is to audit early Some of the major principles of purchasing are: 1. The temperature prevailing in a working area. under supply of inventory can have critical business costs. This group generally comprises physicians, pharmacists, nurses, and administrators, although individuals from other disciplines may be present, such as dieticians, risk managers, and case managers. The old concept of warehouses being dirty and unorganized is out f) Purchased goods/services are only ordered as necessary for the proper conduct of the business. The ethical response is to immediately notify the manufacturer or wholesaler of this situation and arrange for the return of any excess quantity. Economic order quantity, or EOQ, is a formula for the ideal order quantity a company needs to purchase for its inventory with a set of variables like total costs of production, demand rate, and other factors. Sole-source branded products are available from only one manufacturer, whereas multisource generic products are available from numerous manufacturers. Usually, wholesalers agree to deliver 95 to 98% of the items on schedule and offer a 24-hour/7-day-per-week emergency service. Accurate demand forecasting has the highest potential savings for So, as a purchasing professional, you must understand inventory management principles to remain valuable. The final segment identifies package type and size. This helps local pharmacies buy in smaller quantities and receive drugs in a timely manner (i.e., often same day), as opposed to ordering products directly from the manufacturer, in which case shipping and product delivery may take many days. Inventory management requires constant and careful evaluation of external and internal factors and control through planning and review. Each unit’s inventory is configurable and allows for variation and flexibility from device to device, depending on the unit’s location. The P&T committee regularly reviews non-formulary drug utilization to identify trends and review concerns, and this process may prompt the addition of new products to the formulary over time. Many drug wholesalers use rigid plastic totes because they protect the contents of each shipment better than foam or cardboard boxes. The person responsible for checking products into inventory uses the receiving copy of the purchase order that is included in each wholesaler tote to ensure that the products ordered have been received. In this case, the order is transmitted and received in an instant, and the wholesaler’s inventory of particular products is available in near real-time. 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. † United States Pharmacopeia 26/The National Formulary 21, pp. Technicians should pay close attention to these three main issues of product similarity: 1. By keeping an eye on inventory, it is possible to note potential problems with pilferage and waste. Internal control. Accurate demand forecasting has the highest potential savings for any … Approve invoices for payment 4. Review and reconcile financial records 5. line level, based on lead times and safety stock level help ensure that In that chapter, F.O.B. though full-building counts. Right Source 5. critical to minimizing business costs. Frequently, departments require that products received have a minimum shelf life of 6 months remaining before they expire. Certain staff members are often designated to be responsible for managing the pharmacy inventory and purchasing activities. The pharmacy’s non-formulary procedure may or may not restrict the use of various dosage forms of a given chemical entity, so pharmacy technicians need to understand the policy in place at their specific institutions. Demonstrate an understanding of pharmaceutical products that require special handling within the purchasing and inventory system. inventory items but also all types of expense and the purchase of non current assets. When selecting a drug product from inventory, the technician must consider all product characteristics, such as name, dosage form, strength or concentration, and package size. They also provide the pharmacy with electronic order entry/receiving devices, a computer system for ordering, bar coded shelf stickers, and a printer for order confirmation printouts. overstocks. 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. Once the stocked quantity goes below the par level, more product is ordered. These forms also help staff document the details that are needed to prevent errors in the transactions. Identify key techniques for reviewing packaging, labeling, and storage considerations when handling pharmaceutical products. 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). and lost storage space for fast-movers. The products on the hospital formulary dictate what the hospital pharmacy should keep in inventory. Who Really Wins & Why? Demand Forecasting. Previously, we wrote about segregation of duties for the accounts receivable and sales process. Documentation of the administration is automatically entered into the patient’s electronic health record. 8- Principles of Food, Beverage, and Labor Cost Controls. Defining the success level for stock rotation is critical to analyzing your demand forecasting and warehouse flow. The use of automated dispensing devices in inpatient hospital nursing units, clinics, operating rooms, and emergency rooms has facilitated the use of computers for inventory management. Therefore, it is important that the pharmacy technician documents any resulting off-contract purchases and communicates the information to the pharmacist-in-charge for reconciliation with the contracted product vendor. One of the most useful experiences for a new pharmacy technician is to observe the way that the pharmacy department receives pharmaceuticals. An inventory method in which medications, specifically controlled substances, and investigational drugs are inventoried and tracked continuously. 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. Why should you take the time to get a better handle on your inventory control? Storing products that are similar in appearance adjacent to one another can result in error if someone fails to read the label (figure 19-11). Match. The hospital formulary is usually available electronically and/or in print form. Flashcards. This generally occurs after the delivery person has left. Right Quality 2. Some states have established strict limits on the quantities of products that can be borrowed or loaned under casual sale protocol, such as interpharmacy borrowing, lending, or even donating to a charity cause such as a legitimate medical mission. The contemporary practice of receiving employs bar code technology, which simplifies the process of receiving—to the extent that invoice reconciliation against the contents of shipment totes can be accomplished with a bar code scanner. maintain accountability of potential error sources. The first set of digits identifies the specific drug manufacturer or labeler of the product and is assigned by the FDA. 2. Handheld bar code scanning device. An inventory method in which products are ordered and delivered at just the right time—when they are needed for patient care. Test. Idle inventory increases incremental costs due to handling This is a common practice known as stock rotation. Title. An error prevention technique used to differentiate look-alike medication names. An effective pharmaceutical purchasing and inventory control system requires the understanding and active participation of all pharmacy staff. For liquids or injectable products, the color and clarity of the items should also be checked for consistency with the product standard. This ensures that the product bar code is in the BCMA system so that it can scan correctly when it gets to the bedside. There five key principles of inventory management: Focusing on these five fundamentals can yield significant bottom-line savings. 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. The goal is minimizing wasted steps, labor, and cost. counts. terms were introduced, and the focus was on which party would bear the cost of freight. Figure 19–7. Proper storage and availability of these products are essential to the delivery of patient care and the efficient operation of the pharmacy. By knowing what supplies are on hand at a given time, the manager will be able to plan food orders, calculate food costs since the previous inventory, and make menu item changes if needed. Proper control over material can contribute substantially to the efficiency of a business. Proper segregation of duties is an essential element of your company’s internal control. Other important information that may be available in the formulary, specified under each listing, is the dosage form, strength, and concentration; package size(s); common side effects; and administration instructions. The formulary is produced exclusively for health practitioners involved in prescribing, dispensing, administering, and monitoring medications. Right Price and 6. Search for: 6.6 Internal Control Issues and Procedures for Inventory. Many hospitals strive to maintain accreditation of The Joint Commission. Goods to Include. When a product is removed from the market by the manufacturer on its own accord or at the direction of the FDA, for safety or quality reasons, such as mislabeling, contamination, lack of potency, lack of adherence to acceptable Good Manufacturing Practices, or other situations that may present a significant risk to public health. It typically involves the execution of a purchase order from the pharmacy to the manufacturer of the drug. An inventory turn occurs when stock is completely depleted and reordered. Once purchased, funds must be wired to the IBTPP within five business days to satisfy the terms of the order. Some wholesalers offer even larger discounts to pharmacies that may prefer a prepayment arrangement. Learn. An organized group that contracts with manufacturers to purchase pharmaceuticals at discounted prices, in return for a guaranteed minimum purchase volume. 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. Chapter 6: Inventory Valuation Methods. The next segment of digits is the product code, denoting the formulation, dosage form, and strength. The account Purchases is nonexistent with the perpetual inventory system. They may also offer a highly competitive discount (minus 1 to 2%) below product cost/contract pricing and competitive alternate contract pricing. It helps pharmacies manage their expenses and more effectively turn over their shelf inventories. Right Quantity 3. Some pharmacies use sophisticated inventory management carousel systems to manage portions of their inventory (figure 19-2). A portion of the letters are capitalized (e.g., niCARdipine and NIFEdipine). 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. Other problems identified after delivery personnel have left, such as mispicks (i.e., products sent in error by the vendor), product dating, or internally damaged goods, must be resolved according to the vendor’s policies. Non-Formulary Protocol. First, you must know how much inventory to have on hand to ensure continuity of supply in the event of an uncharacteristic increase in either demand and/or lead time. Various drugs with similar names (e.g., niCARdipine, NIFEdipine, cycloSPORINE, cycloSERINE) can cause problems when stored in an immediately adjacent shelf position. 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. There are many industry-specific inventory management best practices you can follow, but there are also a few general practices that every business can benefit from. Perform inventory counts 1. An inventory management system in which predetermined stock minimum and maximum quantities to be maintained are established. Stocking products of similar name, color, shape, and size can result in error if someone fails to read the label carefully. Why gain better inventory control? Principles of Accounting I. Segregation of Duties: Inventory and Cost of Sales. The receiving process begins with the verification of the boxes containing pharmaceuticals delivered by the shipper. Regardless of the size of your operation, the principles of inventory control are the same. Pharmacy technicians usually spend more time handling and preparing medications than the pharmacists. Right Time 4. INVENTORY MANAGEMENT:PRINCIPLES Migom Parnava Kartikey Moderator: S. Chaturvedi 2. Return from Principles of Inventory Management to What Is Inventory Management, Return from Principles of Inventory Management to Purchasing Procurement Center Homepage. Printed formularies are typically updated every 12 to 18 months. 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. This presents pharmacy technicians with the critical responsibility of assessing and evaluating each product from both a content and labeling standpoint. Inventory Control ... invoice or purchase order. Receipt of pharmaceutical on blank paper. 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