Investigating Reasons for Holding Excess Inventories at Directorate General of Medical Supplies (Oman)

Investigating Reasons for Holding Excess Inventories at Directorate General of Medical Supplies (Oman) 1 INTRODUCTION The government and Ministry of Health (MOH) in Oman have been spending an enormous amount of money on pharmaceutical industry (medicines). According to census 2014, the total population in Oman is about 4 million out of which 56% is Omani population. Oman Gross Domestic Product (GDP) in 2015 was about $70.25 billion (£52.5 billion) out of which 2.4% is spent on health sector (£1.3 billion). They have also been investing in the distribution of these medicines to the different delivery points (hospitals, health centres) and the final customers (patients). To improve the pharmaceutical logistics, they have created a single (central) distribution centre called Directorate General of Medical Supplies (DGMS) that supplies and distributes the medicines to the different hospital pharmacies on a regular basis (monthly or bimonthly supply). CITATION Min11 \l 2057 (Health, 2011) The medical supply chain system in DGMS is illustrated in Figure 1. It starts at DGMS (step A) when an order from a primary, secondary or tertiary health institution arrives (step B). The quantity requested is determined, according to the previous month consumption, stock available at the institution and the stock availability at DGMS [step C]. Based on the determined quantity, the issuing process takes place by pharmacist (step D). To avoid mistakes another pharmacist re-checks the issued quantity (step E) and packs them to be loaded (step F) and then delivered to the requesting institution (step G). One of the major aims of this supply chain design is to ensure effective service and to reduce inventory by minimising the final cost. Inventory can be defined as the amount or value of resource or materials on hand which includes finished goods (medicines), work in process and spares and stores. The buying processes of the medicines do not end upon the ordering and receiving of the medicines. It also requires managing the inventory due to the dynamic nature of the demand from the hospitals CITATION Pet04 \l 2057 (Peterson, 2004). BA CQuantity determination Order arrives DGMS (Single warehouse) FEDLoading the issued stock Re-checking the issued quantity Medication issue according to the determined quantity GDelivery point Figure.1 illustrates supply chain system in DGMS from receiving an order to delivery of the Health services To balance demand and supply, it is very important to devise an ordering policy that reflects the ever-changing actual stock situation CITATION Gup13 \l 2057 (Gupta, et al., 2013). This is known as inventory management. This would include the monitoring of material moved into, and out of, stockroom locations and agreement of the inventory balances CITATION Kum15 \l 2057 (Kumar & Chakravarty, 2015). In medical stores (DGMS), a medical inventory management system is used where it helps to control the stock movement. Excess inventory can have a negative impact on the financial aspect of the organization (that is, MOH Oman). Whereas stock should be kept to a minimum, a sufficient quantity of medications has to be maintained for patient ...