LMGT211: LABORATORY MANAGEMENT
WEEK 13: MATERIAL MANAGEMENT
1ST SEMESTER | S.Y 2023-2024
Instructor: PROF. PAMELA SENGSON RMT, MLS, (ASCPI)
MATERIAL MANAGEMENT
- Systemic process of overseeing and controlling the acquisition
and utilization of supplies to ensure both availability and cost-
effectiveness.
Aims:
▪ To have the right material
▪ At the right quantities
▪ At the right time
▪ At the right price
▪ From the right sources
▪ At a least cost
- At the hospital level, this is handled by a centralized material
management department organized into two sections:
A. Purchasing - oversees the ordering of supplies and the
processing invoices from vendors or suppliers.
▪ Invoice is an itemized commercial document that
records the products or services being delivered to the
customer. This contains the total amount due and the
preferred payment method. Invoice can be sent by the
seller either in paper or electronic to the customer*
▪ Invoice and receipt are not the same. Invoices are
issued prior to the customer sending the payment while
receipt is issued once the payment has been received.
Invoice acts as a request for payment while the receipt
acts as a proof of payment*
B. Stockroom - maintains the security and inventory levels
and issues supplies throughout the facility.
Purchasing:
- Clinical laboratories as a business requires raw materials for
successful operation.
- Whereas equipment idled by breakdowns of lack of supplies, is an
economic loss for business. The same situation in the clinical
laboratory can seriously interfere with the delivery of patient care
(which is the most important factor in the clinical laboratory).
▪ Because if you lack supplies, the workload will be impeded,
and you will not be able to cater the patients that equates to
loss of profit*
▪ It is important for us to maintain a good materials
management*
Goals of material management
- Supplies arrive in a timely manner. This depends on contract
your laboratory has with your supplier, it can be periodic, weekly
or yearly period*
- Spoilage is reduced to a minimum. You can do that by
thoroughly inspecting the expiration dates of your supplies and
materials. Spoilage is usually caused by supplies or reagents na
hindi nakita na they are nearly expiring*
- Back orders and delays are avoided. Back-order items means
that they are out of stock, and it is expected to be delivered by a
certain date once it is back on stock. If the suppliers said to you
that ‘The supplies are available in our company, but it will arrive
on this date’, that is already a no for you. When you’re going to
order from a specific vendor or supplier, take note that you should
ask if it already on hand, so that delays can be avoided. Back
orders only cause delay in the arrival of materials and supplies*
- Storage space is used to the best advantage. You should
consider storage spaces since it serves as your warehouse or stock
rooms. Warehouse and stock rooms are important because it
provides an ideal environment for your supplies and materials.
Some material includes ideal temperature from room temperature
up to refrigerator or freezer temperature. You must take note of
the proper storage spaces per material, which is written in the
boxes or instruction manuals, if it is a machine*
- The most economically advantageous price is obtained.
Hindi naman porket cheapest price, that will be the one you’ll be
getting. You should also consider the quality, model, brand and
take note of that in totality in getting your supplies, equipment, or
machines*
Sequence of Purchasing
Product
Orders Receive
Specification
Inventory Record
- Sequence of purchasing starts with product specification, followed
by orders, receiving that orders, and once you received them, you
record and log it in your inventory system*
1. Product research and specification (enquiries and quotation)
- In order to determine the best products for laboratory use, time
must be spent on product research leading to the development of
product specifications.
- Product specification should be prepared after you have
thoroughly researched or studied what you need in your
laboratory. Studying or researching helps assure that there is
adequate quality of purchased reagents and supplies. In this step,
you are going to list down all the materials or equipment needed
to be purchased*
- For example, you are lacking syringe for the next week. So hindi
lang naman sasabihin sa supplier na kailangan mo ng syringe, you
have to specify. What are the specifications or types you will be
needing for a syringe, 5mL, 3mL, or 10mL? How many will you be
needing? Kung kailan mo ba gagamitin ‘yung mga syringe. If
continuous, will your replenishment be weekly, monthly or
annually? What is your preferred brand and model? Sa Bambang
lang ba tayo kukuha? Do you want brand Cardinal or Terumo?
- All of these will be studied in the product research and
specification phase*
- A similar process of evaluation and product specification is
necessary prior to the purchase of major equipment, including
machines that can range from thousand to a million because your
machines also include reagents. In addition, the following
considerations are important:
1. Written specifications – must include detailed description
of required equipment. Take note that specifications must be
written and never be made by verbal agreement, since
verbal agreement is as good as nothing when in comes with
you purchasing a supply. ‘Pag sinabi sayo ng supplier today,
pwedeng maiba yan later on. Nakakalimutan ng ibang vendors
na ‘yun pala yung sinabi nila sainyo because supplier/ vendor
gives different prices to different customers, depending if
you are a government institution, private institution, and so
on. That’s why it is important that you receive specifications
written and in black-and-white*
2. On site visits to see equipment operating in other
laboratories is encouraged. Major equipment, such as
your machine, hindi naman ‘yan agad na hindi mo pa nata-try
eh ipapa-avail na sainyo. Take note that the price is from
hundreds of thousands to a million so isusugal mo ba yung
ganoong kalaking presyo na hindi mo pa nata-try yung kanilang
equipment? They will provide you a demo machine, which is
usually a brand-new machine, kaya if it is brand-new, it will
 work excellently at the beginning if the quality is
substandard only. It is good that you see other laboratories
having that equipment because you can fully know the
quality of that machine once it has already been working for
a year or two. Makikita mo ‘yung mga parts niya if it is still
excellently working even after a few months or years. Pwede
mo naman siyang irequest sa vendor mo na pwede mo bang
tignan sa other laboratories or satellite laboratories*
3. An environment necessary to accommodate the
equipment must be prepared in advance. If you are
going to purchase a chemistry analyzer, alamin mo na in
advance what is the type, if it is floor-type or counter-type
equipment and what is the ideal temperature, what should be
the space in every equipment; kailangan mo na siyang
iprepare beforehand baka kasi magre-request ka ng demo
machine then wala ka naman palang paglalagyan*
4. A more complicated decision is whether to buy a
major equipment. The major factor here is the price. You
have to consider if you really need that in your laboratory or
if gusto mo lang ba magdagdag ng machine. Again, we’re going
back to the product research and specification. If you really
need that and it is required by the DOH requirements, you
should proceed in buying the equipment*
5. Complete instruction manuals should be obtained
with the instruments, as well as the preventive
maintenance manuals. For your equipment, machines and
supplies to last, you should maintain them. Preventive
maintenance manual includes procedures and calibration,
daily, weekly or annual maintenance if needed, kung paano
siya nilisin by part hanggang sa kaloob-looban. The quality
controls and quality assurance steps are also stated in this
manual. Complete instruction manuals and preventive
maintenance manuals should be available*
Materials and equipment
- Some of the few materials and equipment that you will encounter
once you work in the laboratory. You’re not just going to use them;
you’re also going to be tasked with their inventory overall
materials management*
Laboratory supplies and equipment
- Major equipment includes machines depending on the sections
available in your laboratory*
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Purchasing of supplies
- For budgeting purposes, the products that needs specific time and
price criteria are classified as supplies. Items that fall outside
these criteria are classified as capital items.
Moreover, supplies may be classified as:
A. Items that are consumed w/in 1 year or have a shelf life of
less than 1 year.
o Meaning that the item has an expiry date of just a year
or below*
B. Items consumed w/in 1 year, as established by the
comptroller even though their shelf life exceeds 1 year.
o Comptroller means a high-level executive that oversees
the accounting and financial tasks, or even the product
managers, they’ve established that this example
reagent, nakalagay sa kanya is may 2 years expiry date,
but ‘once opened’, the stability of that reagent is just
15 days, 30 days, commonly encountered in chemistry
section’s reagents such as calibrators, controls (normal
and pathologic controls)
The following are considerations in purchasing supplies:
1. Only authorized staff members who are familiar with the
quality of service and reliability of supplies should place
orders.
o Only authorized staff members should be the
purchaser.
2. Delivery schedules are a major factor in determining
whether a purchasing system is in or out of control.
3. High use items should be delivered frequently.
o Example of high use items of MedTech are cotton,
alcohol, syringe, and torniquet.
o They are the ‘consumables’ and they should be
delivered frequently. Mawala lang yung isa diyan can
impede your workflow*
- An excellent method of doing this and can save the laboratory
time and money is through a purchase order.
2. Purchase Order
- Purchase order is a document authorizing the purchase of a
product or service (e.g., maintenance of the equipment, cleaning
of machines) from a vendor or supplier*
- Purchase order could be classified as release orders or standing
orders:
A. Release order and manuals in which the company agrees to
deliver goods at a pre-determined price notified by the
laboratory.
o Example you are a MedTech in one of the primary
laboratories in Valenzuela and you have a agreement
with your vendor that every time you are going to order
a syringe, one box of Terumo 5cc syringe, the price will
always be Php 1,500.00. You already have a pre-
determined price and every time that you are going to
order in that vendor, ‘yun lang yung palaging presyo na
ibibigay nila sainyo*
B. Standing order is an annual contract in which the
companies agree to deliver goods at a pre-determined price
and on an established schedule.
o Annua contract meaning your contract will renew after
a year. Puwede bang magbago yung prices na
napagkasunduan ninyo? Pwede o pwede rin namang hindi,
depends on the renewal of contract and kung anong
mapaguusapan niyo with your vendor*
o Let’s just say included in that annual contract, the pre-
determined price indicated is Php 1,500.00 per box of
5mL Terumo syringe, and then every week (assume
that this is your established schedule) you will deliver
that box to us. Once the annual contract expires, you
can renew or look for another supplier depending on
your preference*
3. Receiving and accounts payable
- Goods should be unpacked and inspected as soon as possible to
ensure that everything is delivered or that some
acknowledgement of back ordered items is made.
▪ A good practice is that you do this while the delivery
personnel is still there para meron kayong witness. ‘Wag
niyong papaalisin yung delivery sales person nang di niyo
nacheck na parallel all the materials that you have received
with the receipt, so that you can ensure that everything is
delivered or that some acknowledgement of back ordered
items is made, kung meron man and also, if there will be
damaged or defective goods, you can identify them as soon
as possible. Bibigyan ka nila ng replacement credit if there
are damages, defective goods, or missing items*
▪ Check if they are in right quantity, right brand or model; if
there are deviations from those, you can return it to them
and make sure that they are also documented in paper, hindi
lang verbal*
Three pieces of information must agree before the company's bill
will be paid by the most accounts payable systems:
▪ Purchase request must agree with the invoice.
▪ Invoice must agree with the packing slip.
▪ And all of this must agree with the Final bill from the
company of your vendor or supplier.
- Huwag lang pirma nang pirma especially this is concerning money
you’re going to pay if you’re the owner, or the laboratory. This is
very crucial. You have to check if it they are parallel with each
other, and if they are all good naman, you can sign kasi kung meron
diyang mga discrepancies, especially if you are the employee or
the staff of the laboratory, you must be held accountable for those
missing, kasi nag sign ka e. Signing means you are acknowledging
that all the received supplies are complete and in good conditions.
Kung meron mang mag deviate ‘dun sa mga qualities and the
numbers, you will compensate, either you’re going to pay out of
pocket or they will get it out of your salary*
Documentation needed in Material Management System
(MMS):
Enquiries (plural form of inquiries)
▪ Enquiries lead to getting information from a vendor /
supplier for the requirement at hand.
▪ This is the start point of a sale or purchase process.
Enquiries lead to establishing a connection with the right
vendor or supplier in order for you to get the next
documentation, which is the quotation*
Quotations
▪ Quotations consist of various pieces of vital
information of a requirement towards a
sales/purchase. Quotations state important information
such as price, delivery times, delivery details, payment
terms, taxation etc.
▪ You can ask for this in different suppliers and you can
compare it. Hindi naman porket nag ask ka ng quotation from
one vendor, hindi ka na puwedeng mag ask to others. You
email or call them so you can compare prices*
▪ In other institutions, especially in government institutions,
yung mga vendors pa ang lumalapit sainyo. Meron silang
tinatawag na bidding, the best price and quality will win*
Orders
▪ When the purchase order of the buyer and the sales
order of the seller agree, the orders become a contract
between the buyer and seller.
▪ In business or in the commerce field, order is a stated
intention, either spoken or written, to engage in a
commercial transaction for a product or service*
▪ Orders if it is from the buyer’s point of view – this expresses
the intention to buy; this is also called purchase order*
▪ In the seller's point of view – intention to sale; the order is
referred to as sales order*
▪ When the purchase order of the buyer and the sales order of
the seller agrees, the orders becomes a contract between the
buyer and the seller*
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Invoices/ Bill
▪ Indicates the products, quantities, and agreed prices for
products or services the seller has provided the buyer. An
invoice indicates the sale transaction only.
▪ Before proceeding with payment, you will be given invoice
so you can track the right product, the right quantities are
present, and the agreed upon price is stated before you
proceed with paying*
▪ Not the same with receipt, since receipt are given after you
have paid for the service or product*
4. Records and inventory control
Inventory management is a continual process of:
1. Checking stock levels
2. Rotating stock (somewhat a system of arranging your
supplies from the oldest units or oldest received in the
inventory, so that it will be used first before the newer once)
3. And minimizing the cost of carrying inventory.
- Inventory check is performed at least once a year, but it still
depends on the policy of your institution and also the type of
material. In the laboratory, it is best that we check the inventory
daily because we have a lot of consumables and if that supply is
depleted, it can impede again the workflow; also to know when to
replenish our supplies*
Three (3) Methods to Track Inventory Levels
1. Perpetual system – you keep account of the inventory every
time the product is used (ex. pregnancy test kits, syphilis test kits,
Hepa B surface antigen test kits, Hepa B screening tests). Every
time you are going to test a patient, you will get a kit from a box
and log it to your inventory system*
2. Periodic system – there is period; can be once a week or
depending on your preferred time (yearly, monthly), or at other
specified time the stock level is counted, and appropriate supplies
are ordered. Example on Nov. 10, 2022, you opened a pack of
EDTA and your balance is 10, so 10-1 is 9. If you’re going to check
after a week, Nov. 16 or 17, pagtingin mo ng balance is seven na
lang. In between Nov. 10 and Nov. 17, nakapagbawas ka pa ng
dalawa*
3. Random checks - are used to document the value of supplies at
a specific time. This is also done as verification procedure; key
part of financial accounting; useful in confirming the accuracy of
perpetual system because your perpetual system can easily
become distorted if you’re not going to maintain it meticulously*
▪ Let’s say every time you’re going to use pregnancy test, you
need to get one kit and you need to log it, e paano kung toxic?
Dalawa na pala yung nakuha mo at ang na-lag mo lang ay isa.
You can counter check it or verify if your perpetual system is
accurate by using random checking*
Inventory system are set at low and high points:
1. The low level is that point at which on hand supplies are
sufficient to carry the laboratory through until good or orders are
received.
▪ You should avoid having low levels and you can do that by
having a good material management system*
2. The upper limit is that level which will meet the laboratories
requirement for a longer period of time, such as several months to
a year.
▪ Is it good to have inventory system at a upper limit? It
depends if you can still have a spacious storage or
warehouse; and you can consider the expiry date, if longer
time ba ‘yan, several months to up to a year, and just ensure
na walang near expiry ‘dun sa mga materials because if there
are, it can lead to wastage of supplies or spoilage of your
supplies*
The Primary Factors Determining The Said Limits Are:
1. Anticipated delivery time for each item.
2. Available storage space
3. The shelf life of the item
4. The anticipated rate of usage
 LIFO, FIFO, FEFO ISSUES METHODS: syringe, divide that by 365 days, you will get your average daily
use of syringe*
- Inventory management is a crucial function for any product- C. Cost of ordering - the cost of running a centralized purchasing
oriented business. Common inventory handling methods include: department is directly tied to the number of purchase orders
▪ First in, first out (FIFO) —this is the most common placed, and the associated work involved with keeping track
technique. invoices as products are shipped and received.
o Kung ano yung unang nabili, ‘yun din ang unang ▪ Can be obtained by dividing the expenses of the
gagamitin. Inventory items are used in order they are purchasing section by the number of purchase orders
purchased* issued*
▪ Last in, first out (LIFO) —this is common among non- D. Annual holding cost - this involves decisions based on bulk
perishable items like petroleum, minerals, and metals. orders, space utilization, and whether it is better to have
o The last to enter your system, organization, or the product on hand or in the supplier's warehouse.
purchased is the one used first* E. Cost per unit - factors such as quantity discounts and container
▪ First expired, first out (FEFO) — materials are sold based size affect this decision. Dividing the purchase price by the
on date they should be consumed regardless of when you container size provides this value.
have purchased it. F. Lead time - it influences the minimum inventor that must be kept
in stock, as well as the quantity that needs to be requested.
Stock Replenishment Techniques ▪ The amount of lead time is generally the amount of time in
between when a purchase order is placed to replenish
- Two techniques are available for determining how and when to
products and when the order is received in the laboratory*
replenish stock:
▪ When the supplier or the vendor said that the lead time is a
1. Minimum-maximum - to establish a set point at which
month, 30 business days not considering the weekends and
inventory is to be recorded and a reorder to level to be
considering working days only (calendar days is when all
maintained.
days are considered, even the weekends and holidays). Let’s
o In this strategy, the inventory levels are continuously
just say that your lead time is 30 calendar days, dapat
reviewed and as soon as the stocks fall below the
magsisimula lang ‘yon when you have given them the
pre-determined level or reorder point that is the
purchase order (for example November 1), dapat more or
time you should replenished your stocks*
less December 1, nasa laboratory mo na ‘yung products that
o You just have to set a minimum level so that you
you’ve ordered*
known when to reorder, then you set a maximum
level so that you prevent over stocking of items*
2. Just in time - a major technique developed by
manufacturers to take advantage of inventory management
opportunities.
o Kung kailan lang kailangan, ‘dun lang oorder*
o A Japanese inventory management method in which
the goods are received from the suppliers only as
needed. You keep as little inventory on hand as
possible, that means you don’t stock-pile products
and raw materials just in case you need them. You
simply just reorder the products to replaced those
you have already sold or used*

Financial Control Inventory

- A specialty management science called operations research has

developed several techniques and formulas for managing
inventory because supplies are the second largest cost incurred by
the laboratory. Much intention has been given in monitoring and
controlling supply expenses*

The techniques/ formulas are the following:

1. EOQ (Economic Order Quantity) - which answers the
question of how much to order at one time (perpetual
system)
o This is the ideal order quantity a company should
purchase to minimize inventory cost*
2. EOP (End of Period Inventory) - also referred to as the
reorder point.
o Mainly used in a periodic system. This provides the
base or safety level for reordering inventory*
3. ROT (Retention of Title) - this allows you to retain
ownership of goods you sell until in a condition of the
contract is fulfilled.
o Helps to establish the best times to order to take
advantage of EOQ and EOP*
o Usually the condition here is the payment, and that
condition gives you security over the goods and
therefore, will prioritize you over the others. If you are
already paid, you will be given priority in those supplies
that you ordered*

In order to determine the EOQ, EOP, and ROT:

A. Annual usage – mainly dependent on the workload of the

laboratory
B. Average daily usage – this information can be obtained by
dividing the amount of supplies ordered in a year by 365
days. Let’s just say in a year, you have ordered 1,000 boxes of

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