Hardy

Caroline Highgrove, Director of Materials Management, of University Operations was looking into the purchasing and supplies system for Hardy Hospital, a teaching hospital at the university. The hospital had an excessively high level of inventory lead to a very high holding or carrying cost. The university was also under pressure to cut expenses and hospital inventory did not seem to be under control.

University purchasing did not understand the importance and nature of hospital inventory, and they were slow to respond. the university was a state institution (public organization), and had to follow strict bidding and purchasing procedures had to be followed both regular stock and special orders Many departments were afraid of running out of regular stock items, because of the university’s purchasing process needed to place new items on the regular stock list, and the long lead times sometimes involved in receiving orders requisitioned from the university’s approved vendor list. This lead to hospital departments ordering for larger quantities than were needed. The university and hospital’s computerized materials-management system was outdated and the data integrity was also an issue due to employees ignoring, or not updating, key information.

There was also an issue with non-regular inventory. Many of these items were critical to patient care and thus were time sensitive. University purchasing kept no records on the hospital’s special-order inventories or for the 215 secondary hospital stocking points such as examination rooms and moveable carts. These orders were ordered Hospital department coordinators, doctors, or head nurses which in turn took them away from their prime duties, patient care. Thus there was a large amount of maverick buying done by hospital staff. The complex purchasing process required by the government was not efficient in a hospital setting and lead to hospital staff becoming frustrated with process and thus ignoring the purchasing...