Purchasing Management

PURCHASING MANAGEMENT

Introduction

• Purchasing is the process of obtaining goods, services, and equipment in the right quality, right quantity, at the right time, from the right source, and at the right price.
• In healthcare, it ensures the availability of medicines, medical equipment, surgical items, consumables, and hospital supplies to support uninterrupted patient care.
• It is a subsystem of materials management and crucial for maintaining quality care and cost control.

Objectives of Purchasing

1. Timely availability of required materials without shortages.
2. Right quality assurance to maintain patient safety and hospital standards.
3. Cost-effectiveness – purchasing at competitive prices.
4. Standardization of materials and equipment.
5. Maintaining adequate inventory – neither understocking nor overstocking.
6. Developing reliable sources of supply through vendor relationships.
7. Compliance with laws, ethics, and hospital policies.
8. Efficiency in documentation, record-keeping, and audit trails.
9. Flexibility to meet emergency and routine needs.
10. Accountability and transparency in procurement decisions.

Elements of a Good Purchasing System

• Clear policies and procedures documented in a purchasing manual.
• Standardization of items based on hospital requirements.
• Vendor selection and registration based on capability, reliability, and quality.
• Competitive bidding / tender system to ensure fair pricing.
• Purchase committees for transparency in decision-making.
• Inspection and quality control before acceptance.
• Proper documentation – purchase orders, invoices, goods received notes.
• Integration with stores & finance for smooth flow.
• Efficient stock control – avoiding stock-outs or over-purchasing.
• Regular review and audit of purchasing efficiency.

Fundamentals of Purchasing

• Right Quality – suitable for purpose and meeting technical specifications.
• Right Quantity – based on consumption, lead time, and safety stock.
• Right Price – determined through tenders, quotations, and negotiations.
• Right Source – reliable, financially stable, and technically competent suppliers.
• Right Time – purchased in time to avoid delays.
• Right Place – delivery at hospital stores or designated points.
• Right Contract – with clear terms regarding payment, warranty, penalties.
• Right Documentation – legal and auditable records of purchase.

Effective Supervision in Purchasing

• Supervisors should ensure:
• Adherence to purchase policies.
• Verification of needs and indents from departments.
• Checking quality specifications.
• Following tender procedures transparently.
• Preventing malpractice, favoritism, or corruption.
• Monitoring delivery schedules.
• Coordinating with stores for stock position.
• Regular performance evaluation of suppliers.

Purchasing Systems

(a) Centralized Purchasing

• All purchases made by a central purchasing department.
• Advantages:
• Better control, avoids duplication.
• Economies of scale (bulk buying).
• Standardization of materials.
• Disadvantages:
• Delay in urgent requirements.
• Bureaucratic process.

(b) Decentralized Purchasing

• Individual departments make their own purchases.
• Advantages:
• Quick fulfillment of urgent needs.
• Greater autonomy to departments.
• Disadvantages:
• Lack of control, possible duplication.
• Higher cost due to loss of bulk discounts.

(c) Group Purchasing

• Two or more hospitals join together to make bulk purchases.
• Advantages:
• Reduced costs, economies of scale.
• Better bargaining power with suppliers.
• Disadvantages:
• Coordination difficulties among hospitals.
• Less flexibility for specific needs.

Principles of Purchasing

1. Plan purchasing scientifically based on hospital demand.
2. Ensure transparency and fairness.
3. Procure through competitive bidding whenever possible.
4. Avoid overstocking and stock-outs.
5. Standardize items.
6. Develop and maintain vendor relationships.
7. Keep proper documentation and audit records.
8. Adhere to hospital financial and government regulations.

Committees in Purchasing

(a) Purchase Committee

• Evaluates quotations/tenders.
• Finalizes supplier and purchase order.

(b) Selection Committee

• Selects appropriate equipment, drugs, and supplies based on technical & clinical input.

(c) Audit Committee

• Examines procurement process for compliance and cost-effectiveness.
• Ensures no malpractice or wastage.

(d) Receipt & Inspection Committee

• Verifies goods received against purchase order.
• Conducts quality checks and testing.

(e) Stock Verification Committee

• Performs periodic checks of stock against records.
• Detects pilferage, theft, or mismanagement.

(f) Distribution Committee

• Oversees distribution of supplies to departments fairly and as per requirement.

(g) Codification Committee

• Develops item codes for inventory.
• Helps in standardization, computerization, and avoiding duplication.

(h) Condemnation & Disposal Committee

• Identifies non-functional, expired, or obsolete items.
• Authorizes safe disposal or auction.

Stock Management Issues Related to Purchasing

• Stock Verification: Physical count vs. book balance to prevent fraud/theft.
• Distribution: Supplies issued to departments as per indents.
• Codification: Unique codes for easy identification and computerized stock management.
• Condemnation: Declaring unusable/obsolete items and preventing storage clutter.
• Disposal: Safe disposal of condemned items (auction, scrap, bio-medical waste disposal).
• Stock-outs:
• Definition: Situation when required item is not available in stock.
• Causes: Poor planning, delayed purchases, supplier failure, inadequate safety stock.
• Consequences: Affects patient care, emergency delays, reputation loss.
• Prevention:
• Maintain safety stock.
• Regular consumption analysis.
• Reliable vendor contracts.
• Timely reordering.

Video Description

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