PROF: SIR RAMON GARCIA
HEALTH INFORMATION SYSTEM FOR MEDICAL LABORATORY SCIENCE
ICTM111 WEEK-14
Material Management System
MATERIALS MANAGEMENT SYSTEM
-The management function of hospital materials—
making sure that services go successfully from one
source to an end user—includes several areas of the
hospital and could drastically affect medical institution
expenses.
•Executing this function in a manner that
- lessens expenses and
- ensures adequate cash flow
*requires effective management of a large amount of
information from several sources.
Purchasing Process Overview
PURCHASE REQUEST
•A purchase request could be used as a first step in the
process of purchasing. This is used internally to identify a can anticipate needs based on previous cycles.
need for an item.
•A purchase request generally is a document which is
made by a user to notify the purchasing department
regarding needed items and services.
•This document specifies
a. quantities, as well as a
b. timeframe for the items requested.
c. authorization information needed to proceed with the
purchase.
THINGS TO CONSIDER ON PURCHASING ITEMS:
•Inventory Control
-Johnston (2014) states that inventory is one of the •In Material Management Systems, the “Inventory Item
biggest expenses for most medical institutions. Inventory
control plays an important part in refining the quality of
healthcare services, since the lives of the people are on
the line, as well as because medical costs are
increasing.
Moreover, Johnston details the strategies on how to
improve inventory control within healthcare facilities:
•Making Sure Shippers Are Accurate
-Tracking medical inventory must involve checking
shipments for accuracy. Most medical suppliers use
third-party shippers, and the tracking system must
ensure that the correct supplies were loaded at the
warehouse. Even if items are ordered correctly, tracking
can catch any errors in filling those orders. It can also
reveal whether medical supplies have been properly
handled in transit.
•Alignment With Sales Projections
-In the field of medicine, sales projections can be
wildly inaccurate. It is difficult to predict disease and
accident patterns, and patients are notoriously reluctant
to switch doctors, hospitals and health insurance.
Tracking inventory in comparison to actual sales is
essential. This prevents waste, frees up cash that would
have gone to excess inventory and helps medical
companies identify trends they might not have seen
before.
JENNY ROSE YUCADDI
•Compliance With Regulations
-The medical field is heavily regulated. A company
that routinely fails to serve the best interests of patients
can quickly find itself being investigated, sued or simply
shunned by health-care consumers. Tracking inventory
can be extremely important in maintaining the
responsiveness of a medical company. This applies not
only to front-line health providers but also to the
suppliers of those providers. Knowing what inventory is
on hand and what items are needed can keep a medical
company responsive and prevent closer scrutiny by
regulators.
•Establishing Buying Cycles
-Inventory control helps medical companies
understand buying cycles. Instead of responding to
needs for supplies and equipment, inventory personnel
Smoothing ordering out to fit predictable cycles can
eliminate shortages and overages. Buying cycles can also
be tracked to determine whether trends are shifting and
need to be adjusted. In this way, tracking inventory can
make inventory ordering into a manageable process that
is proactive instead of reactive.
ITEM MASTER MAINTENANCE - MEDICAL AND NON-
MEDICAL INVENTORY ITEMS
•Because the importance of inventory control has been
recognized, the usage of a materials management
system could bring an advantage.
Maintenance” screen has many sections. The upper
portion contains master information.Additional options
appear after the selection of an existing item.
•“Item Tab” is used for maintenance of the attributes of
an inventory item, such as product type, item class, item
type, etc. If the balance and order activity is zero (0),
items can be deleted using this option.
•Users could set the product type to group similar items
for sales analysis and inventory reporting. Most of the
inventory reports are based on a certain product type.
•The “Item Availability” form specifies inventory levels
across all warehouses.
ITEM INDENTS AND ISSUES
•In some cases, there are instances where items are
damaged either upon receiving from the supplier or
during the move from the source to another location.
•Some suppliers allow returns of the said goods that
have indents or the like, with a guarantee of
replacement without any additional payments. This
applies to distribution and retail industries where the
goods for sale are fast-moving.Normally, damaged items
are moved to another warehouse for them to be
monitored.
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PROF: SIR RAMON GARCIA
HEALTH INFORMATION SYSTEM FOR MEDICAL LABORATORY SCIENCE
ICTM111 WEEK-14
RE-ORDER LEVEL, RE-ORDER QUANTITY, MINIMUM
AND MAXIMUM LEVELS FOREACH STORE
•In a typical material management system, Re-order
level is the minimum quantity of an item that a
company has in stock, so when the stock reached the
minimum quantity stated, the item must then be re-
ordered (Purchase Order/Production Order).
•A basic re-ordering method implemented in many ERPs
and other inventory management software is the
Min/Max inventory ordering method. The “Min”value is
representative of a stock level that prompts a re-order,
and the “Max”value is representative of a new targeted
stock level that follows the re-order. The main difference Preferred Vendors
of these two—Max and Min—is often interpreted as
Economic Order Quantity (EOQ). Although the Min/Max
method is an unpolished method for inventory ordering,
the Min/Max settings could be adjusted to provide better
inventory performance (Vermorel, 2014).
DOCUMENTATION NEEDED IN MMS:
Enquiries
-Enquiries are the start point of a sale or purchase •Fully licensed, bonded, and insured
process. Enquiries lead to getting information from a
vendor / supplier for the requirement at hand.
Enquiries lead to establishing a connection with the right
vendor / supplier in order to get a quotation, place the
order and receive the requirements.
Quotations
-Quotations consist of various pieces of vital
information of a requirement towards a sale /purchase.
Quotations state important information such as price,
delivery times, delivery details, payment terms, taxation
etc. On a quotation being accepted an order is placed for
the requirements.
Orders
-In business or commerce, an Order is a stated
intention, either spoken or written, to engage in a
commercial transaction for specific products or services.
From a buyer's point of view it expresses the intention to business transaction
buy and is called a purchase order. From a seller's point
of view it expresses the intention to sell and is referred unit, and total price of goods
to as a sales order. When the purchase order of the
buyer and the sales order of the seller agree, the orders
become a contract between the buyer and seller.
Invoices
-An invoice or bill is a commercial document
issued by a seller to the buyer, indicating the products,
quantities, and agreed prices for products or services the signature of Seller accepting
seller has provided the buyer. An invoice indicates the
sale transaction only.
COMPARISON OF QUOTATIONS AND PREFERRED
VENDOR FOR EACH ITEM
Purchase Quotations
•A purchase quotation is a document for requesting
prices and delivery information from a vendor before
the purchase order.
•One could create a purchase quotation, then send the
document to a vendor; when a response from the
JENNY ROSE YUCADDI
vendor is received, with a list of prices and delivery
dates, one can enter the information in the purchase
quotation. This way, one can store in the system the
complete history of the sourcing process.
•From the quotation, the information tracked enables
one to choose the right vendor for the purchase. Using
the quotation helps in lessening expenses, improving the
quality and increasing on-time delivery. A purchase
quotation report allows one to compare offers in order
to pick the appropriate vendor for the purchase scenario.
Afterwards, one can create the purchase order from the
selected quotation.
-Companies typically maintain a list of preferred
vendors, from which inventory items are usually
purchased. Several qualities of a preferred vendor that a
company looks for are:
•On-time performance
•Reasonable costs
•High quality of products and services
•Good Business practices
PURCHASE REQUESTS, ORDERS CREATION AND
APPROVAL PROCESS
Purchase Orders
•A Purchase Order, on the other hand, is a document
which records a business transaction between the
buyer and the seller. A buyer issues his order, and upon
seller acceptance of the order, a legally binding contract
is created between the parties (SAP, 2012).
A simple Purchase Order will identify the following basic
elements:
•Buyer: name, address, and contact info of party giving
money for goods
•Seller: name, address, and contact info of party
receiving money for goods
•Order Number: a unique ID number to track each
•Item Description: details, quantity of goods, cost per
•Shipping Address: where the goods will be shipped
•Shipping Date: when the goods will be delivered to the
final location
•Billing Address: location of where the invoice should be
sent so the Buyer can pay
•Signature: signature of Buyer offering to buy and
•Order Date: when the business transaction occurred
Approval Process
-The person who creates the document, either a
purchase request or order, is the originator. Upon adding
documents to the material management system, the
system checks for any approval requirements. If the
document fails to meet the requisites for an approval,
the originator is notified that the document needs
approval. The document is temporarily saved as a draft.
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PROF: SIR RAMON GARCIA
HEALTH INFORMATION SYSTEM FOR MEDICAL LABORATORY SCIENCE
ICTM111 WEEK-14
-An internal request is immediately sent to the first to temporarily house them until a final decision has been
approval stage when the approval process is launched.
This request is received in the Messages/Alerts Overview
window, and the approver can access the document.
Approval can be done through a mobile phone if the
devices are integrated. A internal notification goes back
to the originator with a link to the rejected document
should the approver reject the document. The originator
can amend the document, and the approval procedures
will continue until theapproval conditions are adequately
satisfied (SAP, 2012).
Inspecting a Shipment
•Persons receiving shipments should, upon
acknowledging receipt of an order, conduct an
inspection to verify the following minimum conditions:
•The products conform to the purchase order
requirements and other relevant documents (for
example: correct model number, description, size, type,
color, ratings, etc.)
•The quantity ordered against the quantity shipped or
delivered.
•There is no damage or breakage.
•The unit of measurement count is correct (e.g. if the
unit of measurement on the purchase order is one
dozen, there should be 12 in the package).
•Delivery documentation (packing list, certifications,
etc.) is acceptable.
•Perishable items are in good condition and expiration
dates have not been exceeded.
•Products are operable or functional.
Partial Deliveries
•Departments should contact the appropriate
Purchasing Agent whenever a purchase is received as a
partial delivery without acknowledgement or notification
from the supplier. This information is typically noted on
the packing list.
Tracking of Goods
•Goods can be easily tracked /traced when they are
managed by Serial or Batch. Aging of products can also
be done if the items are slow moving/stay longer in the
warehouse.
EXPIRED STOCK AND QUARANTINE
Expired Stock/Inventory
•Upon reaching their expiration dates, some goods, such
as food and medicine, can no longer be utilized. In rare
instances, it may be sold to other parties at a lower cost.
However, as soon as inventory expires and its value falls
below its original cost, this must be reflected in the
financial records so as not to misstate the financial
statements. The amount that reduces inventory in your
records is recognized as a loss that is a reduction in profit
(Keythman, 2017).
Quarantine Stock/Inventory
•When undecided about how to handle defective goods,
whether to be sold as scrap, reworked, returned, or used
as it is, a quarantine location or warehouse can be used
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reached.
•Inventory is put into quarantine if initially rejected
during:
•Production, upon completion of an operation, when
specified as Move Rejected End Item to Quarantine.
•Inbound inspection upon receipt of:
–Manufactured end items
–Purchased items
–Sold items on sales return orders
–Enterprise Planning distribution orders
–Outbound inspection upon issue of:
–Materials to production (Infor LN Warehousing, 2018).
LIFO, FIFO, FEFO ISSUES METHODS:
•Inventory management is a crucial function for any
product-oriented business. Common inventory handling
methods include:
•First In, First Out (FIFO) – Inventory items are sold in
the order they are purchased. This is the most common
technique.
•Last In, First Out (LIFO) – Last to enter the system are
sold first. This is common among non-perishable items
like petroleum, minerals, and metals.
•First Expired, First Out (FEFO) – Materials are sold
based on date they should be consumed, regardless of
when it was purchased.
PERIODIC PHYSICAL STOCK TAKING AND ADJUSTMENTS
WITH TRACKING
•An inventory count is a process where a business
physically counts its entire inventory. A physical
inventory may be mandated by financial accounting rules
or the tax regulations to place an accurate value on the
inventory, or the business may need to count inventory
so component parts or raw materials can be restocked.
Businesses may use several different tactics to minimize
the disruption caused by physical inventory.
•Inventory services provide labor and automation to
quickly count inventory and minimize shutdown time.
•Inventory control system software can speed the
physical inventory process.
•A perpetual inventory system tracks the receipt and use
of inventory, and calculates the quantity on hand.
•Cycle counting, an alternative to physical inventory,
may be less disruptive (CTI Reviews, 2016).
•Fortunately, these are all features and benefits offered
by the Material Management System. Barcode and RFID
are supplementary technologies that can be used in
combination with the Material Management System in
order to have more accurate and less burdensome
inventory counts.
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