Inventory management is an essential element of operational efficiency and a common concern of all clinical laboratories. Maintaining a clear view of what constitutes a clinical lab’s inventory and exercising precise control over those elements remains a challenge. Short-notice rush orders, which are common in clinical labs, further tax inventory management and contribute to increased costs due to expedited shipping needs, decreased client satisfaction, and additional workflow interruptions to routine processes.
Historically, inventory management has been performed with a dependence on outdated logs, previous ordering patterns, guesswork, and trial and error. While these methods may seem straightforward, they are error prone and tend to magnify problematic inventory practices, create unnecessary rework, and sustain an obscure view of laboratory assets.
Management Options Abound
Numerous automated software and hardware combinations, and Web-based systems exist for modernizing inventory management, many of which include features for performing complex calculations of common logistical metrics that improve overall inventory management when effectively matched and implemented to a specific laboratory setting. Within the molecular department of Sonic Reference Laboratory (SRL), we developed a custom, Web-based inventory application which has demonstrated that highly effective, semi-automated inventory management can be achieved without a large expenditure while also meeting the department’s operational needs. This application handles any variety of inventory, including supplies, reagents, standing order projections, and even office supplies and sundries.
Determine Potential Failure Points
The molecular department at SRL initially decided to address the optimization of our inventory management system through a Six Sigma project. Potential failure points were assessed and the highest relative risk priority number processes were targeted. The following common effects of failure were identified:
To address these potential failure points, we determined that an understanding of two critical metrics was required: When to order (reorder point) and how much to order (order volume) (See FIGURE 1.)
Logic-Based Supply Management
The most critical step in establishing mathematical, logic-based supply management is to begin by accurately describing the workflow using diverse and robust metrics. Central to this challenge is establishing what is commonly termed as the safety stock level,1 which simply put, is inventory that is carried to prevent stockouts. We focused on establishing a reorder point that is directly related to the traditional safety stock definition (see FIGURE 2 for a detailed description).
Initial project feasibility was addressed using Excel macros and spreadsheets, and several logistical metrics were calculated to best fit the operational environment. All rate functions were based on time in weeks instead of days. This minimizes fluctuations from day to day variance and allows application equally to diverse workflow pipelines (eg, some assays are performed only once per week, while others are performed daily). Back orders also were considered when setting safety stock levels depending on risk assessment and failure effect levels.
A Homegrown Solution
The resulting Inventory Application program helps secure inventory data integrity, provides more robust control over replacement strategy, enables reproducible calculations and logic that control when items are ordered, and brings transparency to the entire process. Through our use of this Web app, we now have a workable software solution that provides the following benefits to the molecular department:
1. Removes the guesswork for supply management by enabling reproducible application of logistical calculations, including desired base stock level, lead time, demand rates, item usage rates, and to-order volumes
2. Provides a central multi-user hub accessible by PC or tablet with both user and admin account settings to prevent unintentional changes to the database and item builds
3. Removes uncertainty and inconsistency regarding which and how many items need to be ordered, saving valuable personnel hours
4. Enables the establishment of target inventory levels as needed across any pipeline: large or small, simple or complex
5. The database is consistent and not susceptible to end-user manipulation, accidental deletions, and/or missed inventory mistakes
6. Stock levels are measured and date/time stamped
7. Immediate action is taken when an item’s stock level falls below the order point, which is easily viewable, flagged, and can be confirmed by the user
8. Orders are grouped by work week, enabling multiple measurements to be taken throughout the week by various users across multiple technical areas, which are then binned into an ordering interface. This interface is viewable by vendor or assay group, which reduces the number of purchase orders generated, bringing efficiency to the workflow
9. Detailed exports are available for auditing and serve to back up the current calculated settings for each item
10. User access is selectable by department, which allows veritably endless utilization on a single application build
The overall estimated positive financial impact for the molecular department is approximately $5,000 per month from decreased personnel-hours spent on inventory management and decreased overnight/rush orders arising from inventory mismanagement. A single staff member with Web application experience can easily maintain all super-administration functions required.
The inventory management system has helped the department tremendously by streamlining processes and providing easily accessibly transparency. Due to the success of this program in the molecular department, use of the Web app is currently being implemented within other departments across SRL.
John Woody, MS, MLS(ASCP)CM, MBCM, is the molecular department manager at Sonic Reference Laboratory (SRL). He received his training in biomedical research and molecular biology at Eastern Virginia Medical School. He is an avid champion of workflow optimization and technological development within in the clinical workspace.
Claude G. Sawney, MS, MLS(ASCP), SSBB, is the director of quality at SRL. He is an advocate for patient safety, and establishing and building a culture of quality and continuous improvement.
Paul Enrico Sale Dimaano, MS, MB(ASCP)CM has worked in the SRL molecular department since its inception. He developed and currently maintains the Inventory Application site used at SRL.
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