Inventory Management Strategies for Outsourced Repackaging


July 2010 : Unit Dose Packaging - Vol. 7 No. 7

While many hospitals opt to purchase as much medication already in bar coded unit dose form from the manufacturer as possible, most hospitals need to employ additional measures to satisfy all their bar coded unit dose medication needs—and this means purchasing the necessary repackaging equipment for use on-site, outsourcing, or using some combination of both these options.


For VCU Medical Center, a 779-bed hospital in Richmond, Virginia, outsourcing some of our packaging needs presented an efficient and cost-effective solution to managing our packaging workload. We decided to outsource repackaging of several oral liquids not available in unit dose form since packaging these items onsite was labor intensive and time consuming.


Inventory Management Challenges
While outsourcing provides numerous benefits, it also can pose some inventory management challenges. Anticipating potential issues and implementing a solid system to manage this process will help ensure optimal inventory.


In order to accommodate this change in our unit dose packaging system, we had to change our ordering scheme. Since we needed the bulk medications that would be packaged by our outsourcer shipped directly to them, we had to work with our vendor and wholesaler to setup a separate ordering account just for these items.


There were logistical considerations as well. Our wholesaler’s distribution center is in Greensboro, North Carolina, and we needed the bulk medication to be shipped to the outsourcer’s headquarters in Boston. To accommodate us, our wholesaler established a purchasing system whereby those medications destined for our outsourced repackager would be acquired from a different distribution center in Massachusetts. This not only cut down on the time it took for bulk product to get to our outsourcer, it also reduced our overall shipping costs.


To avoid having too much or too little outsourced product in stock, we have established average monthly usages for each outsourced product, and, when possible, we only place an order once a month. With most medications, we aim to maximize the number of turns thus reducing the amount of money we have tied up in inventory. However, with repackaged items, there are some complications with this strategy. There can be financial incentives to repackaging larger lots as some vendors charge a fee every time an item is ordered in addition to the dose fee. So purchasing more than a month’s supply at one time may make sense for some hospitals. With our vendor, the expiration dating for the liquid unit dose medications they repackage for us is generally several months, so this is feasible.


Delivery considerations may also play into your ordering decisions. While we can typically get medications from our wholesaler by the next business day, for repackaged items, turnaround time is usually four to five business days. Because of this longer turnaround time, it is imperative that we stay on top of our outsourced inventory, and pay particular attention to items that are running low. By always stocking a little extra of our outsourced items we avoid situations where we must repackage these items ourselves. Nonetheless, we do maintain a back-up supply of all the medications that we outsource allowing us to manually package on site if necessary. While our vendor will accommodate rush orders in some cases, there is an express shipping fee attached to this, so we only use this option when it is absolutely necessary.


One lesson we learned along the way is that when placing an order, it is important to pay attention to the differences in package size, as ordering “pack of ten” vs “each” makes a big difference in cost: If the package size is “each” and you order ten, you will get ten, whereas if the package size is “pack of ten” and you order ten, you will get 100. Typically you cannot return repackaged items that are ordered in error, so getting the initial order correct is critical.

Conclusion
While outsourcing repackaging may result in additional costs, for us, this added cost was clearly worthwhile as we have now reallocated staff to other critical tasks such as automated dispensing cabinet quality assurance and USP compliance activities, as well as improving patient safety and meeting TJC requirements. This new unit dose packaging process required that we make adjustments to how we manage our inventory, and while this posed some challenges along the way, we now have a system in place that is very easy to manage.

Ian Orensky, PharmD, MS, is the supervisor of pharmacy services at VCU Medical Center. He received both a PharmD and a MS in pharmacy administration from VCU School of Pharmacy in Richmond, Virginia. Ian’s interests include pharmacy operations, informatics, and technology.

 

 


Outsourced Repackaging Tip

Be aware of outsourced items that have 30-day expirations. Unlike items packaged in-house or purchased in unit dose, often by the time these drugs are received from the repackager, you only have three weeks before the item expires. While we try to load most medications into our automated dispensing cabinets (ADCs), our technicians have been instructed to avoid loading short-dated medications (outsourced and otherwise) because this has caused excessive waste in the past. Typically, if we have patients that require a medication with a short expiration date, we will send it up to the unit and place it in a secured patient-specific bin within the ADC.

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