PURCHASE AND INVENTORY

CONTROL
PRESENTED BY
DR. K.KARTHICK
Associate Professor
K. K. College Of Pharmacy
PURCHASE AND INVENTORY CONTROL
DEFINITONS:
PURCHASE:
 Purchase of drugs and pharmaceuticals may be defined
as a standardized method of obtaining drugs and
pharmaceuticals by paying money or its equivalent.
PURCHASE AND INVENTORY CONTROL
(Contd…,)
INVENTORY –DEFINITION:
 Inventory means the stocking of goods with their estimated
value.
 It includes raw materials, general supplies, machinery etc.
 Inventory control is the systematic method of planning the
quantity of inventory to be procured and stocked with the
minimum investment.
 This is done without interruption to the sales.
PURCHASE AND INVENTORY CONTROL
(Contd…,)
OBJECTIVES OF PURCHASE AND INVENTORY CONTROL:
1. To operate the hospital pharmacy at low cost without
causing any obstruction to the sales.
2. To provide better service to the patients by maintaining
continuous supply of medicines.
3. To invest minimum in the inventory and also preventing
blocking of money.
4. To prevent shortage in supply and overstocking of items.
5. To reduce wastage of capital in the form of storage and
labour costs.
PURCHASE AND INVENTORY CONTROL
(Contd…,)
 Purchaseof drugs along with their inventory control is
considered as an important phase of operation of
successful hospital pharmacies.
PURCHASE AND INVENTORY CONTROL
(Contd…,)
PRINCIPLES:
PURCHASE OF DRUGS:
 Purchase of drugs for a hospital can be done well by a
trained pharmacist than any other personnel.
 In case of large hospitals, a purchasing –officer is
appointed who works under the guidance of the
pharmacist.
 This helps in the maintenance of quality of the drug
products.
PURCHASE AND INVENTORY CONTROL
(Contd…,)
Purchasing Officer:
 He is appointed by the hospital administration for the
purpose of purchasing inventories for the hospital.
 He takes the assistance of the person in-charge of the
drug store (Registered Pharmacist).
Duties:
1. To issue the purchase orders
2. To frame and execute the competitive bidding procedure
3. To follow up the delayed purchase orders
4. To maintain purchase records
PURCHASE AND INVENTORY CONTROL
(Contd…,)
Hospital Pharmacist:
 Duties of a hospital pharmacist in connection with the
purchase of drugs are as follows:
1. Evaluation of specifications for the quality and source of all
pharmaceuticals.
2. Maintenance of the list of names and addresses of the drug
manufacturers and suppliers.
3. Preparation of specifications for drugs, chemicals and
biologicals.
4. Preparation of indents for purchase of drugs.
5. Preparation of receipt memo if drugs are received directly by
the pharmacy.
6. Preparation of return goods memo in case of any defects in
the received items.
PURCHASE AND INVENTORY CONTROL
(Contd…,)
INVENTORY CONTROL – PRINCIPLE:
 Inventory management is defined as a systematic method of
planning the quantity of inventory to be procured and
stocked with minimum investment.
 This is done without interruption to the sales.
 The main goal of inventory management is to keep the
inventories at optimum level, without stock-outs and
excesses.
 For this, the following two mutually dependent tasks should
be solved.
1. To minimize the investment in inventory
2. To assure high level of customer service.
PURCHASE AND INVENTORY CONTROL
(Contd…,)
 Inventory management focuses on getting the
 Right type of inventory
 At Right time
 In Right qualities
 To Right places
 Whereas, inventory control focusses on using that
inventory most effectively to keep the costs to the
minimum.
PURCHASE PROCEDURE
Set up for Purchasing Drugs in a Hospital:
1. Centralized Purchase:

 All the items required for the entire hospital are

purchased by the central purchase department of the
hospital.
 In case of requirement of same types of materials by
different departments,the centralized purchase is
advantageous.
 However, through the centralized purchase department,
it takes longer time to make purchases.
PURCHASE PROCEDURE (Contd…,)
2. Decentralized Purchase:
 Various departments of the hospital purchase their
requirements separately.
 This avoids delay in getting the supplies.
 This is a better set up in case of large hospitals.
 However, there is no uniformity in the purchase process
and some departments may purchase the same materials
at higher prices than other departments.
PURCHASE PROCEDURE (Contd…,)
 Purchase procedure involves different steps for the
procurement of goods.
1. Determination of Requirement
2. Source of supply
3. Purchase order
4. Receipt of Acknowledgement
5. Receipt of Drugs or materials.
6. Distribution of drugs to various wards.
PURCHASE PROCEDURE (Contd…,)
1. DETERMINATION OF REQUIREMENT:
 The materials to be purchased for a particular period are
well planned for the purpose of their regular and
continuous use.
 Purchase requisition is generally prepared by
departmental heads and provides information mentioned
below:
i. Type of material to be purchased
ii. Time of requirement
iii. Quantity to be purchased.
PURCHASE PROCEDURE (Contd…,)
2. SOURCE OF SUPPLY:
 The PTC sets adequate standards for the purchase of
quality drugs.
 Procurement of stocks is generally done by following
sources:
i. Medical store Depot (MSD)
ii. Direct purchase from wholesellers and manufacturers
iii. By inviting tenders
iv. Emergency purchase from Local market.
PURCHASE PROCEDURE (Contd…,)
i) Medical store Depot ( MSD) :
 This organisation has six medical store depots (MSD) at
Mumbai, Chennai, Kolkata, Kurnool, Hyderabad and
Guwahathi.
 The items purchased by these organisations are
subjected to various in-house tests at the testing units in
Chennai and Mumbai.
 It runs on no-profit and no-loss basis.
PURCHASE PROCEDURE (Contd…,)
ii) Direct purchase from wholesellers or manufacturers:
 Direct purchases from wholesellers, manufacturers are
done following a proper purchase procedure.
 Materials are then received and stocked at their relevant
places under proper storage conditions.
iii) By inviting tenders:
 Tenders are invited from various suppliers and generally
the lowest bidder is choosen for supplying the order.
 However both price and quality are considered.
PURCHASE PROCEDURE (Contd…,)
iv) Emergency Drugs from Local Market:
 Items not available at MSD, and any emergency drug
which is out of stock can be immediately purchased from
local market.
 For this purchase form is prepared in duplicate.
 One copy is sent to the department and the other copy is
retained by the Pharmacy.
 This avoids the department concerned to re-order the
same item.
PURCHASE PROCEDURE (Contd…,)
3. PURCHASE ORDER:
 After selecting the supplier, Chief Pharmacist or any other
suitable authority prepares a purchase order giving
detailed description, specification, packaging price and
quantity needed etc. of the items.
 This purchase order is in written form and it is the evidence
of contract between the buyer and the supplier.
 Number of copies varies from hospital to hospital.
i. The original copy is sent to the supplier
ii. One copy for accounts section
iii. One copy for purchase department.
iv. One copy for the concerned receiving department
v. Fifth copy as history copy.
PURCHASE PROCEDURE (Contd…,)
 The purchase order should clearly indicate the terms and
conditions, i.e. price, quality and time of delivery.
 There should be a regular follow-up of purchase order so
that drugs and supplies can be received timely.
PURCHASE REQUEST FORM
PURCHASE ORDER FORM
PURCHASE PROCEDURE (Contd…,)
4. RECEIPT OF ACKNOWLEDGEMENT:
 After placing the order to the supplier by sending a copy
of purchase order, the supplier in turn sends
acknowledgement of the order saying that he will be able
to supply the goods with the terms and conditions which
are mentioned in the purchase order.
PURCHASE PROCEDURE (Contd…,)
5. RECEIPT OF DRUGS:
 On receipt of drugs, there should be a system in the stores
whereby the supply of drugs received in the medical stores
from the manufacturer are properly checked by person
specially assigned for this purpose.
 Preferably the same person is responsible for reviewing the
stocks, date of expiry, description, quantity, batch number
as mentioned in the order form.
 Random sampling can be done to make sure that products
confirm to the tendered specifications like date of expiry,
any visible sign of degradation such as change of colour,
caking etc.
PURCHASE PROCEDURE (Contd…,)
 Ifany such degradation is observed the matter should be
reported to medical superintendent and local drug
inspector.
 These stocks should never be used until the drug
inspector’s permission is granted and even the information
should be sent to the manufacturer.
 After the thorough examination of drugs, the above officer
should give “ No objection to accept the supply” in writing
on the hospital copies of delivery chellans, invoices by
putting signature and date.
PURCHASE PROCEDURE (Contd…,)
 The invoice received from the supplier is sent to accounts section
for accuracy along with price and quantity.
After verifications, the accounts section certifies and passes, the
invoice for payment and on this basis, cashier makes the
payment either by cheque/draft.
6. Distribution of Drugs to Wards:
 Drugs should be supplied in the original packing of
manufacturers.
 However if it is not possible to do so, then that should be
supplied in clean containers so that the integrity and original
properties can be preserved.
PURCHASE PROCEDURE (Contd…,)
 Name and quantity of the drug should be properly labelled.
 It is always advisable that suitable precautions should be
taken to dispose off “original empty containers” in order to
avoid their misuse.
 The containers should be destroyed in the presence of a
responsible person with a written statement signed by him.
 Chief pharmacist should visit wards to check whether the
drugs are properly stored under special storage conditions
like cold storage, cool temperature and at room
temperature.
THANK YOU