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What is an inventory management system?

Jun 27, 2023

10 minutes read

Keeping going an effective automated medical supply chain takes work and time. It would be best to involve multiple processes, industries, and a solid healthcare inventory management strategy to achieve this task. What does the inventory management system mean? It allows you to track some items throughout the entire supply chain. 

A lack of healthcare equipment and medical supplies, including diagnostic equipment, critical drugs, and raw materials, could be expensive and result in low-quality medical care. 

Healthcare supplies are very diverse and include controlled substances that require careful management and items with expiration dates. To avoid having too much or too little stock, you need a tool that gives you quick access to up-to-date information on medical supply inventory and product movement is vital. 

Why do you need an inventory management system?

Without a system to accurately track and control medical items, each company has to work on an ad-hoc basis, which can quickly run into situations where the business is overstocked or understocked. Inventory control software allows you to estimate the ingredients and components needed for automated medical supplies. With such a system, you may avoid being unable to meet customer demand or with excess stock, eroding your bottom line.

It is entirely up to you which healthcare inventory management system you choose. You can adapt numerous techniques, from simple approaches to comprehensive solutions.

How should a company choose the right fit between multiple inventory control software and practices?

Definition of an inventory management system

Inventory management systems centralize and streamline the process of controlling the flow and maintenance of inventory. They ensure the availability of the right amount of inventory of the right quality at the right time.

Inventory control software combines technology (software and hardware), procedures, and processes that help to oversee, monitor, and maintain items, supplies, raw materials, etc.

An inventory management system consists of the following:

  • Inventory apps or management software to provide a database. 
  • The software can analyze data, generate reports, forecast future demand, and more.
  • Hardware tools for reading barcode labels, such as handheld barcode scanners or smartphones with barcode scanning apps.
  • A system for identifying every inventory item and its associated information, such as barcode labels or asset tags. 
  • Processes and policies for labeling, documentation, and reporting.
  • People who can follow these processes and policies.

Who benefits from inventory management systems?

The most crucial advantage of a streamlined stock management system is the charge of maintaining or dispatching supplies and medical devices. But it is more than that. Various medical organizations can benefit from it, including the following:

Distributors of medical supplies. The order turnaround is faster and more efficient with automated medical supplies inventory management solutions that take care of incoming orders and extract relevant information. Some of those solutions increase the distribution by as much as ten times with 24/7 management and zero errors.

Solo practitioners and hospitals. Well-organized hospital inventory management allows healthcare providers the equipment and supplies they need to provide the best medical help to their patients. 

Manufacturers of medical equipment. Automation and the ability to track inventory across the assembly line allow for better control and enhance equipment dispatch efficiency, which improves vendor-customer relationships. In addition, inventory management bots can schedule device maintenance at the point of sale.

Types of inventory management

Boiling down the many groups used today. Organizations use two popular inventory management strategies to remain competitive: periodic and perpetual.

Periodic type of inventory management systems

This inventory management solution allows organizations to track the available and sold medical items at specific intervals. This method is not expensive in implementation and is easy to understand. But it also has some cons. Most importantly, you can gather the information only at specific intervals. Periodic inventory control software suit small businesses. 

Perpetual type of inventory management systems

Perpetual inventory management system updates inventory records continually. One of the most significant advantages of this software is the availability of up-to-date inventory information and a lower number of physical counts needed. If inventory records are continually updated, employees don’t need to check stock levels repeatedly, saving time and money.

However, companies must also consider the available technology when considering this inventory management method. An organization needs a robust inventory management system and a few other subsystems to make this method efficient. Requiring these technological inclusions comes with many benefits.

However, there are some downsides to consider:

  • These systems require updates. Depending on the platform’s deployment, this could lead to costly downtimes when you implement these upgrades.
  • These systems rely on customized software and specialized equipment, which can add a high price tag to maintaining the business.
  • Recorded inventory might not reflect the actual list, and without regular physical inventory counts, this could lead to discrepancies.
  • Improperly scanned items, errors, and stolen goods impact inventory records and could prevent inventory counts from matching up.

Now would be an excellent moment to discuss the software needed for comprehensive, complex, perpetual-based management operations.

Systems within systems

Jumping into a perpetual inventory control strategy requires a few technological pieces that may need to be present in a smaller organization. Firstly, larger companies with extensive inventories need a tool to help optimize their storage practices. Inventory management platforms take over many daily processes that go into managing stock.

One significant advantage of adopting an inventory control system is its data visibility. As you complete tasks, the system gathers valuable metrics and data that employees can display on a dashboard.

It helps to find parts of the hospital inventory management strategy that may have issues and resolve them before they become expensive. This data can also be leveraged for planning the future and making purchasing decisions based on demand information aggregated from the past.

These solutions also aid in discovering valuable connections to suppliers, often at the heart of any firm involved in inventory control. Some platforms even come with supplier network access built in. Smaller organizations often benefit from this feature, which can give them the possibility to be better than competitors.

You will also find many other advantages of implementing automated inventory management software:

  • Strengthen inventory control strategies.
  • Forecast demand.
  • Cut out manual data entry and improve accuracy.
  • Optimize product storage spaces.
  • Reduce errors and cut costs.
  • Increase the overall health of supply chains.

Barcode systems

Many hospital inventory management platforms include barcoding systems, a common feature that helps organize and speed up daily tasks while boosting accuracy and efficiency. Inventory levels are automatically updated when an employee scans a product in or out.

Mobile scanners are also standard features included within these barcode systems, further speeding up the scanning process. These systems come with several advantages:

  • Automatic inventory updates.
  • Optimized reporting and documentation.
  • Efficient stock movement within and between warehouses.
  • Quicker transfers from picking, packing, and shipping.
  • Speedy scanning with mobile tools.
  • Fewer mistakes related to manual entry.

Radio frequency identification systems

RFID systems are another essential facet many inventory control systems include and support. From stocktaking capabilities to generating purchase/order history, RFID is digitally encoded data that help streamline inventory processes. RFID systems are used for stock control. They are primarily encrypted in active and passive RFID intelligent tags.

After you have used fixed readers to scan items as they move about the warehouse, the scanners can automatically add this data to the inventory system. This type of RFID system is known as active; passive RFID systems require handheld devices similar to a barcode system. However, the dynamic has a range of about 300 feet, while passive technology only has a range of 40 feet for scanning.

There are also a few downsides to RFID tagging systems that are worth mentioning:

  • Much more expensive than barcode-based systems.
  • RFID tagging suffers from interference issues.
  • Transitioning into RFID can be costly as suppliers, customers, and transport companies must also have the equipment available.
  • RFID tags carry more data than barcodes which can bog down unprepared servers.

Top benefits

The automated medical supplies flow may only function well with the inventory control software. A computerized inventory control system allows the operation of a centralized database with information about every vendor, item, specification, supplier, and the total number of specific items available.

Hospital inventory management systems are essential for understanding what items move quickly and which are more slow-moving. It allows keeping tabs on current stock levels and determining a time to reorder. A comprehensive automated inventory control system offers countless benefits to companies, including:

  • Improved cash flow.
  • Better reporting and forecasting capabilities.
  • Reduction in storage costs (overhead).
  • Reduced labor costs.
  • Reduction in dead stock.
  • Better organization, productivity, and order accuracy.
  • Enhanced transparency.
  • Improved supplier, vendor, and partner relationships.
  • Track data in real-time.
  • Lower personal employee costs.
  • Optimize chains of supply.
  • Increase efficiency and allow employees to focus on essential tasks.
  • Multitask effectively.
  • Minimize spend.
  • Simplify workflows.

Primary features

  • The software can be integrated with enterprise accounting solutions, CRM software, and eCommerce platforms. From barcode scanning to inventory tracking, access real-time inventory updates.
  • Manufacturing by managing inventory levels in multiple warehouses in real-time. 
  • Advanced reporting and complete visibility over manufacturing, accounting, inventory, and customer reports. Access accurate, centralized data and integrated, compact reporting.
  • Business intelligence by dividing and analyzing customer sales data while accessing flexible, customizable dashboards..

Inventory management solutions with basic functionality

Many cloud-based applications already have some basic functionality for inventory control, which can be the next step after working with spreadsheets. With these essential functionality tools, you may still need spreadsheets to fulfill specific requirements.

Advantages: you don’t need to look for a new solution; use the given applications that are mostly cloud-based and don’t have to be installed.

Disadvantages: that software sometimes can not match specific needs.

Customized software for inventory management

It is better to use dedicated inventory control software to help you track and control stock. If the solution of your choice is cloud-based, you can sync it up with other cloud applications and access your data at any time and place.

Advantages: dedicated software is flexible, designed specifically for the task, and easily integrated into other systems. 

Disadvantages: the software needs proper setup.

Systems for enterprise resource planning

By buying the enterprise resource planning (ERP) solution instead of multiple different cloud components that integrate, you can cover all aspects of comprehensive business planning. It involves finding and installing the needed modules, including the inventory control software.

Advantages: you can work with a single system that covers accounting, inventory, HR, supply chain, etc.

Disadvantages: requires considerable time and workforce to implement, tailored software does each task better, and can be expensive (with ongoing costs for maintenance and upgrades). 

How healthcare inventory management software can help you?

An automated medical supply inventory system can help fulfilling tasks related to order management in different departments of medical companies. For example:

  • Real-time inventory tracking.
  • Stock control.
  • Integrated systems across multiple locations.
  • Data on expiration dates and equipment maintenance needs.
  • Manufacturing.
  • Automatic procurement and reorder capabilities.
  • Automated communications with vendors and customers.
  • Forecasting potential based on collated and historical information.
  • Details on inventory levels across the production chain.
  • Evident, traceable assembly lines for better control.
  • Purchase order information is automatically read, and data is extracted.
  • Parallel order processing through multiple systems.
  • Order dispatch.
  • Shorter waiting times for access to supplies and equipment.
  • Automated responses to sales agents and distributors.
  • Better patient/customer focus because less time is spent on admin tasks.
  • Greater volume capacity with higher accuracy levels.
  • Improved accuracy with medical inventory management.
  • Fewer vital stock shortages across locations
  • Improved patient treatment.

How the comprehensive medical supplies order management system has to be?

Any inventory solution needs to provide real-time data and be accurate and fast. The single, integrated system is straightforward, has communication capabilities, a flexible, customizable design, and can fully automate crucial order management tasks. Moreover, the platform has to be fully scalable to meet the specific needs of all healthcare facilities. 

Reasons for upgrading the management system

By choosing a customized healthcare inventory management solution, you make a lot of benefits to your company. Below you will find some signs that it might be time to upgrade.

  • The costs of inventory increase. You have to control the holding costs to maintain your bottom line. The best option to minimize holding costs is to store just as much stock as you need, no more, no less. To keep your storage efficient, you need efficient inventory control software.
  • More accuracy is needed. If it is difficult to track the amount of a particular item available, it is time to buy a dedicated solution for inventory management.
  • More flexibility is needed. Using spreadsheets is not an unusual way to operate inventory. And for some cases, it can be enough. But when you realize a need to add some extra sheets to your solution, or if your employees can’t access real-time data, it might be the right time to consider upgrading to cloud-based inventory software.
  • The growth is slowly. Slowing sales because of too much time spent manually creating reports rather than focusing on your customers or contacting your stockroom to find out what they have to sell can be a symptom of poorly managed stock. In this case, customized software can allow you to improve the processes and continue growing.

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