Hospital Inventory Management: Best Practices & Software Guide

Inventory is one of the largest expenses in hospitals—and one of the most mismanaged. From expired drugs to stockouts during emergencies, poor inventory management quietly drains profits and affects patient care.

The Hospital Inventory Challenge

Common problems in Indian hospitals:

• Overstocking: Tying up capital in excess inventory
• Stockouts: Critical items unavailable when needed
• Expiry Losses: Medicines expiring before use (₹lakhs lost yearly)
• Pilferage: Theft and misuse going undetected
• Manual Tracking: Paper-based systems with errors
• Vendor Issues: No visibility into supplier performance

Types of Hospital Inventory

• Pharmacy/Drugs: Medicines, injections, fluids
• Consumables: Syringes, gloves, dressings, catheters
• Surgical Items: Sutures, implants, prostheses
• Lab Reagents: Testing chemicals, controls
• General Stores: Stationery, housekeeping, linen
• Equipment Spares: Parts for medical equipment

Key Software Features

1. Multi-Store Management

• Central store → sub-stores flow
• Department-wise stock allocation
• Inter-store transfers
• Store-wise stock reports

2. Purchase Management

• Purchase requisitions and approvals
• Vendor management with ratings
• Quotation comparison
• Purchase orders to vendors
• GRN (Goods Received Note)

3. Stock Control

• Batch/lot tracking
• Expiry date management
• FEFO (First Expiry First Out)
• Minimum/maximum stock levels
• Reorder point alerts
• Barcode scanning

4. Consumption Tracking

• Issue to departments/patients
• Auto-deduction on dispensing
• Return handling
• Wastage documentation

5. Analytics & Reporting

• Stock valuation report
• Expiry report (items expiring soon)
• Slow-moving items
• ABC analysis (by value)
• VEN analysis (Vital/Essential/Non-essential)
• Vendor performance

Best Practices

1. ABC-VEN Analysis

Categorize items by value (ABC) and criticality (VEN):

• A + V items: Tight control, never stockout
• C + N items: Can have lower safety stock

2. FEFO Dispensing

Always dispense items with earliest expiry first to minimize waste.

3. Cycle Counting

Instead of annual physical counts, count a portion of inventory regularly:

• A items: Count weekly
• B items: Count monthly
• C items: Count quarterly

4. Just-in-Time for Fast Movers

For high-volume items, maintain minimum stock and order frequently.

5. Vendor Rationalization

Work with fewer, reliable vendors for better service and pricing.

Integration Points

• Pharmacy: Direct link to dispensing
• IPD: Bedside consumable tracking
• OT: Surgical item consumption
• Laboratory: Reagent management
• Finance: Cost center accounting
• Tally: Purchase voucher export

ROI of Inventory Software

• 20-30% reduction in expiry losses
• 15-20% reduction in inventory carrying costs
• Zero stockouts with proper alerts
• Staff time savings with automation