BYA.SWAROOPA, MSC(NURSING)

Management• Management refers to the establishment

and attainment of objectives. BASIC RESOURCES

MEN

MATERIALS

MACHINE

METHODS

MONEY

MARKET

Planning StaffingCoordinating

& Communicating

Organizing Directing Controlling6 M’s

DEFINITION OF MATERIAL MANAGEMENT

1) IT IS DEFINED AS SYSTEM OF PLANNING,

ORGANIZING, DIRECTING, COORDINATING,

CONTROLING, MAINTAINING ADEQUATE

EQUIPMENT AND SUPPLIES WHERE BY

RIGHT QUANTITY AND QUALITY OF STOCK

ITEMS, PROPERLY STORED, EASILY

RETRIEVABLE AND DISTRIBUTED FOR THE

USE WHEN EVER REQUIRED AT A GIVEN

TIME.

“ IGNOU”

2) MATERIAL MANAGEMENT IS CONCERNED

WITH PROVIDING MATERIALS NEEDED BY

THE PERSONNEL OR EMPLOYEE TO WORK

EFFECTIVELY IN AN ORGANIZATION TO

ACHIEVE ITS OBJECTIVES.

3) MARETIAL MANAGEMENT IS

MANAGEMENT & CONTROL OF GOODS,

SERVICES, EQUIPMENT FROM THE

ACQUISITION TO DISPOSITION, CONCERNED

WITH PROVIDING DRUGS, SUPPLIES AND

EQUIPMENT NEEDED BY HEALTH

PERSONNEL TO DELIVER HEALTH

SERVICES.

PURPOSES OF MATERIAL MANAGEMENT:

…TO REDUCE COST.

…TO HAVE ADQUATE MATERIALS ON HAND WHEN NEEDED.

…TO AVOID STOCK OUTS. (a situation in which an item is out of

stock).

…TO AVOID WASTAGE.

…TO MINIMISE SHORTAGE.

…TO ENSURE ADQUATE QUALITY & QUANTITY.

…TO PROVIDE SPECIFIED MATERIALS, DRUGS, SUPPLIES

IN REQUIRED NUMBER.

…TO PROVIDE JOB SATISFACTION.

…TO DEVELOP KNOWLEDGE AND SKILLS FOR HEALTH

CARE.

…TO INCREASE THE EFFICIENCY OF HEALTH CARE

SYSTEM.

…TO ENSURE APPROPRIATE AND SAFE WASTE DISPOSAL.

FUNCTIONS OF INTEGRATED MATERIALS MANAGEMENT

PLANNING & SOURCING.

BUDGETING.

RESEARCHING & ANALYSING.

INDENTING & PROCURING.

RECEIVING, MOVING, STORING & PRESERVING.

ACCOUNTING & CONTROLLING.

ISSUING & DISPATCHING.

DISPOSING.

PRINCIPLES:RIGHT ITEM

RIGHT QUALITY AND QUANTITY OF SUPPLIES.

RIGHT TIME.

RIGHT PLACE.

RIGHT PRICE/COST

RIGHT SOURCE.

RIGHT DELIVERY.

RIGHT METHOD.

RIGHT PEOPLE.

POSDCORB.

Material Planning

"Material planning is the scientific way of determining the

requirements that goes into meeting production needs

within the economic investment policies”. –

“Gopalakrishnan & Sunderasan”

It is done at all stages and all levels of management.

Aim of material management planning

To get:

The Right quality

Right quantity of supplies

At the Right time

At the Right place

For the Right cost

BASIC PRINCIPLES OF MATERIAL

MANAGEMENT PLANNING

•POSDCORB.

•Sound purchasing methods

•Skillful and hard poised negotiations

•Effective purchase system

•Should be simple

•Must not increase other costs

•Simple inventory control programme

ELEMENTS:

DEMAND ESTIMATION .

PROCUREMENT.

RECEIVE AND INSPECTION.

STORAGE.

ISSUE AND USE.

MAINTENANCE AND REPAIRE.

DISPOSAL & CONDEMNATION.

ACCOUNTING& INFORMATION SYSTEM.

1) DEMAND ESTIMATION:

PREPARING OR FORMULATING THE LIST OF ITEMS

REQUIRED BY AN ORGANIZATION.

BASED ON THE CONSUMPTION PATTERN OF

ORGANIZATION OVER LAST 2-3 YEARS

OBJECTIVES,

CHANGING TRENDS,

HEALTH CARE ACTIVITIES,

PROGRAMMES RUN BY INSTITUTION IS TO BE

FORMULATED.

2) PROCUREMENT:2ND STEP.

PURCHASE OF ITEMS REQUIRED ONCE

THE LIST OF REQUIREMENTS ARE

PREPARED.

OBJECTIVES OF PROCUREMENT

SYSTEMAcquire needed supplies as inexpensively

as possible.

Obtain high quality supplies.

Assure prompt and dependable delivery

Distribute the procurement workload to

avoid period of idleness and overwork.

Optimize inventory management through

scientific procurement procedures.

PURCHASING PRINCIPLES (6 R’s)

Purchasing is the procurement of

right quantity of material,

of right quality,

at right price,

to be supplied at right time ,

at right place,

from right source

Types of Purchasing ty

Centralized :- thepurchasing procedureof materials fordifferent departmentis done together fromone purchasingdepartment. This isseen in smallorganizations.

Decentralized:- differentdepartment purchasetheir requirementseperately. This isbasically seen in largeorganizations.

METHODS IN PROCUREMENT

PROCESS:Quotations.

Tender.

Negotiation.

Discount.

Direct procurement.

Spot purchase.

Risk purchase.

Many Suppliers Strategy.

How is the purchasing done????

2) TENDERS:- It is a written letter or a published documentthat is aimed at finding the price for procuring certainmaterials.

An offer to carry out work, supply goods, or buyland, shares, or another asset at a stated fixedprice.

Tenders are invited from recognized firms. A few typesof tenders are:

# single tender

# Open tender

# Closed tender or limited tender

Single tender:- It is invited from one reliable supplier.This kind of tender is floated only when the items arerequired urgently.

Open tender:- Also known as ‘ press tender’. This isused when the value of item to be purchased is veryhigh. It is used to locate more suppliers. In this tenderprocured, a small amount of the deposit money istaken from the supplier so that they do not withdrawfrom the submitted rates.

Closed tender or limited tender: It is done to arrive atthe mutual understanding between the supplier/vendorand the buyer.

3) NEGOTIATIONS:-

It is a kind of win-win situation.

Both the parties try to benefit to the maxima through the

negotiation.

It is not a kind of bargaining but a mutual understanding

between the two parties.

19 July 2012 23KLE College of Pharmacy, Nipani.

What’s the need for negotiation?

@ prices are related to large volumes or to a

large value.

@ terms and conditions are required for large

volumes.

@ contract is desired for a longer period.

@ variations in quantity to be purchase are

possible.

@ when supplies or services can be obtained

from only one source.

@ when no acceptable quotations are received

from the other vendors.

4) DISCOUNTS:- They are cash concessions offered by

the vendor to the buyer, in order to enhance the

volume of the business opportunities.

Reasons for offering discounts?????

! When there is a bulk purchase.

! When the bills are cleared immediately.

! And also to maintain the good raport

with the buyer.

Types of discounts:-

1) Volume contracts.

2) Deals

3) Discounts

4) Consignment terms

# Volume contracts:- This kind of discount isoffered proportionate to the volume of materialordered.

# Cash discount:- Cash discount is given on thebasis of the time of the payment done by thepurchaser. The normal credit period is 90 days.

# Cumulative discount:- It is a method of offeringthe discount on the basis of actual purchasesand appropriate to the quantity range in a year.

5) Direct procurement :

is the act of acquiring raw materials and

production goods. These purchases are generally

large quantities of something acquired from a

pool of suppliers at the best possible cost,

reliability and quality.

6)Spot purchase:

is purchase for immediate delivery, as opposed

to delivery in three or six months' time (for example).

7) Risk purchase:

The risk that is unexpected changes in the prices

would penalize an purchaser Since the purchaser

knows that there is risk in purchasing the product

as the prices would be fluctuation, still he

purchase the same. It is the unexpected changes

that produce this risk.

8) Multiple supplying strategy:

Purchasing from many many suppliers.

REMEMBER……….

HISTORY SHEET OF EQUIPMENT

Name of equipment

Code number

Date of purchase

Name of supplier

Name of manufacturer

Date of installation

Place of installation

Techn. Manual / circuit

diagrams / literatures

Guarantee period

Spare parts inventory

Warranty period

Life of equipment

Down time / up time

Cost of maintenance

Date of condemnation

Date of replacement

Steps in the Procurement Cycle

Scheduling

Define Requirements

Budget and Funding

Procurement

Requisition

Select Procurement Type

Prequalification of Bidders

and Invitations to Bid

Develop Bid

Documents

Management of

Bidding Process

Execution of Contract

Procurement CycleThe procurement cycle may consist of eight processes

8. Payment

3. Requisition assigned

to a Vendor

5. Order follow-up

2. Source

determination

1. Requirements

determination

4. Order processing

Purchase OrderPurchase Order

6. Goods receipt and

inventory management

Purchase OrderPurchase Order

7. Invoice verification

PURCHASE REQUESTSPARTS OF A PURCHASE REQUEST

Date the request.

Include account numbers, object codes, and dollaramounts.

Recommended Vendor (at least one).

Include a delivery date - specify mandatory if a certaindelivery date is required.

List items – quantity, unit of issue, cost per unit,description of item (specifications), extended price(Unit cost X qty). Include freight charges if known.

Attachments – price support, quotes, documents.

Delivery Address – this is where the vendor will deliverthe service or item or where Central Receiving will re-deliver the items.

Point of contact and phone number.

Purchase Requisition

34

Purchase Order

3) INSPECTION, RECEIVING:

Sound policy.

Through Examination of equipment.

Should have basic facilities for

inspection based on its size & function.

Government & commercial laboratories

also made for analysis of chemical

composition of drugs.

4) STORING/ INVENTORY

CONTROL: Adequate space to store.

Require number of racks, shelves ,

refrigerators.

Medical stores should be near to other

stores of hospital .

Drugs are grouped according to their

pharmacological action or alphabetical

arrangements.

First in first out to be followed.

Storage conditions need to be

Cool and cold room conditions should

be available in medical stores to be

maintained a large variety of drugs.

Strict inventory control must be

maintained by

o Material manager,

o Store keepers,

o Supervisors,

o Nursing in charges.

Group wise and alphabetical arrangement

helps in identification and retrieval.

The entire stock is Verified & counting to

be done in a periodical intervals.

Physical verification is done at the end of

every calendar year/ financial year.

If any material are found unserviceable a

list to be prepared & they are

condemned by the complete authority.

Monitor expiry date.

5) ISSUING ARTICLES AND USE:Indent book to be written and send to stores

with required things then only they issue.

Before supplying articles it should be entered

in to computer (indent).

Arrangement of material should be arranged

alphabetically or group wise.

When we issuing first in and first out principal

to be followed. (FIFO)

6) MAINTAINANCE & REPAIR:

Maintenance, repair, and operations (MRO)

become out of order or broken (known as repair,

unscheduled, or casualty maintenance)

Obsolete Material – Any material that can no

longer be used because of decommissioning,

redesign, damage, deterioration, inactivity.

7) Condemnation:

CONDEMNATION &

DISPOSALCriteria for condemnation:

The equipment has become:

1. Non-functional & beyond economical

repair

2. Non-functional & obsolete

3. Functional, but obsolete

4. Functional, but hazardous

5. Functional, but no longer required

DISPOSAL

1. Circulate to other units, where it is needed

2. Return to the vendor, if willing to accept

3. Sell to agencies, scrap dealers, etc

4. Auction

5. Local destruction

CONCLUSIONMaterial management is an important management tool

which will be very useful in getting the right quality and

right quantity of supplies at right time.

Having good inventory control and adopting sound

methods of condemnation and disposal will improve the

efficiency of the organization.

Principles of material management and procurement are

applicable to every organization as well as individuals.

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brothers medical publishers (p) ltd; 2000.

Gopalakrishnan & Sunderasan: Material Management, Prentice Hall of India

Pvt Ltd. New Delhi, 1979.

Kulkarni G R. Managerial accounting for hospitals. Mumbai: Ridhiraj enterprise;

2003.

Kumar R& Goel SL. Hospital administration and management. Vol 1 ( first

edn).New Delhi: Deep & deep publications.

Gupta S& Kanth S. Hospital stores management, an integrated approach.( First

edn). New Delhi: Jaypee brothers; 2004.

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