Performance of Procurement and Inventory Management of Hospital Materials: Case of a Taiwanese Medical Centre

Abstract

The purpose of this research is to examine current procurement and inventory management practices and to improve inventory policies for the central warehouse and industrial depot. The primary goal of material procurement and inventory management in healthcare organizations is to reduce supply costs while maintaining patient care quality. In general, there are two ways to keep supply levels stable: Joint procurement and direct purchase from the point of use. In the case of joint procurement, the related point of use will place an order with the central warehouse. The alternative way is for each department to place the order directly with the supplier. To keep the service running, new order policies must be implemented. In the present investigation, we define a performance metric, the supply-demand ratio, to assess the efficiency of inventory management and procurement processes.  The easiest way is to set up a high inventory level to avoid and shortage. The new strategy allows for a significant reduction in holding expenses, idle stock, and space usage while still maintaining service levels.