Pharmacy Supply Chain

1
Pharmacy Supply Chain
A Structured Approach to Managing Pharmacy
Inventory David Stead Chief Pharmacist Royal
Bournemouth Christchurch Hospitals David
Owens Supply Chain Development Manager NHS
Logistics
2
Stock Categorisation - Background

• All stock arriving at RBH Stores was handled in
  exactly the same way
• We felt that looking at the stock in more detail
  might enable us to examine the supply route in
  different ways, to reduce handling and
  stockholding.

3
Stock Categorisation - Geography

• Currently nearly all stock arrives at RBH Stores
  
• (exceptions e.g. Clozapine direct to St Anns)
• The stock is then distributed on requisition to
• RBH Dispensary
• RBH Aseptic Unit
• RBH Manufacturing Unit
• Christchurch Hospital Dispensary
• St Anns Hospital Dispensary (Dorset Healthcare
  Trust)
• Dorset Ambulance NHS Trust

4
Stock Categorisation - Approach

• Define critical items
• - clinical
• - cost
• - volume of use

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Stock Categorisation Approach

• Define all stock as
• - Bulk
• - Direct to Dispensary
• - Multiple site use
• - Single site use
• - OTC

6
Stock Categorisation - Challenges

• Different approaches to criticality
• Does the computer system have the flexibility to
  handle this?
• Can our wholesaler (s) handle the change?

7
Stock Categorisation - Progress

• All stock has been categorised
• Developing direct to dispensary and bulk
  deliveries
• Direct to Aseptic to start shortly
• Colour coding for Stores staff

8
Formalising the Approach

• Developing an Inventory Management Policy
• Why manage inventory ?
• Inventory categorisation
• Clinical risk
• Supply chain risk
• Value
• Stock holding rules
• Inventory management reviews
• Challenges and solutions
• Benefits

9
Why Manage Inventory ?

• Avoid overstocking and wastage
• Avoid shortages of critical items
• Avoid unnecessary financial commitment
• Improve management information
• Improve efficiency
• Improve patient care

10
Step One

• Do we need to hold stock ?
• Is the item critical to patient care ?
• Is it easily substituted ?
• Is it easy to obtain ?
• Is it used regularly ?
• Is it easy to store ?
• Bulky / Hazardous
• Is it expensive ?

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Clinical Risk
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Inventory Categorisation
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General Rules for Holding Stock
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Definitions Rules
Replenishment Frequency

• Definition
• Frequency of replenishment reviews to bring
  managed stocks up to agreed maximum stock level
  bearing in mind the Replenishment Lead Time
• (Order entry lead time Supplier lead time
  Receipt processing time)
• Rule
• Current frequency is Daily
• may be extended to reduce order, receipting and
  invoicing activity
• e.g for bulk products

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Definitions Rules
Maximum Stock Level

• Definition
• Upper limit that should be held for all stocked
  items to avoid unnecessary overstocking
• Rule
• Default level set at 2 x average quantity of
  stock consumed between replenishment review plus
  safety stock
• or
• 2 x average quantity consumed during
  replenishment lead time plus safety stock
• whichever is greater, rounded up to nearest unit
  of issue (or pack size)

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Definitions Rules
Minimum Stock Level

• Definition
• Lowest level of stock that should be held to
  avoid stock outs before replenishment orders are
  received
• Rule
• Default level set at 1 x average quantity of
  stock consumed between replenishment review plus
  safety stock
• or
• 1 x average quantity consumed during
  replenishment lead time plus safety stock
• whichever is greater, rounded up to nearest unit
  of issue (or pack size)

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Definitions Rules
Re-Order Level

• Definition
• The level at which replenishment action must be
  taken, bearing in mind the lead-time of the item,
  to avoid stock falling below minimum levels
• Rule
• Default level set at 1 x average quantity of
  stock consumed between replenishment reviews
• This may be weekly or at an interval most
  appropriate for the category of the inventory
  item
• eg. Bulk products

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Definitions Rules
Safety Stock

• Definition
• Additional buffer stock for items in Criticality
  Category A to cover unexpected demand (Spikes),
  or to meet mandatory requirements
• Rule
• Default level set at 100 of minimum stock level
• Level may be varied to reflect the criticality of
  certain items and could be increased to 150 or
  200 to meet specific circumstances

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Definitions Rules
Forward Stock Cover

• Definition
• Period (expressed in weeks) that current stock
  will last based on average usage rate over
  preceding 12 months
• Rule
• Target level of 2 weeks maximum

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Inventory Management Reviews
Review Frequency

• Management by exception
• Frequency should match category
• Rolling review programme

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Challenges Solutions

• Scale of the categorisation task
• Flexibility of JAC to handle inventory
  categorisation

• categorise known critical items first (all
  locations)
• set up timetable for remaining items by location
• incorporate into process for adding new drugs to
  catalogue
• fixed re-order levels for cat A
• floating re-order level for cat B/ C
• virtual locations on JAC for specific
  categories i.e. Bulk items
• Raise enhancement request through JAC user group

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Benefits

• Clear policy for stock management
• Rules can be altered to meet prevailing
  circumstances
• Promotes adoption of automated stock control
• Less manual intervention for products that do not
  need it
• Establishes formal review programme
• Validate category
• Assess impact on product availability
• Monitor stock value

23
Discussion time

• Any questions?
• Any comments?
• Any suggestions or ideas?