Material Management Department Manual

Quality Operating Document No : Process RML/GS/01 Dr. Ram Manohar Lohia Combined Manual of Operations Date of Issue : Hospital , Lucknow General Store 15/1/2008

Service Name : General Store Operational Policy Date Created : 15-01-2008

Chief Medical Superintendent

Approved By : Name :

Signature :

Stores In charge

Reviewed By : Name :

Signature :

Director

Issued By : Name :

Signature :

Stores In charge

Responsibility of Updating : Name :

Signature :

Page of Contents:

Sl.Order Particulars A Purpose

1 Manual of Operation Quality Operating Document No : Process RML/GS/01 Dr. Ram Manohar Lohia Combined Manual of Operations Date of Issue : Hospital , Lucknow General Store 15/1/2008

B Scope C Responsibility D Departmental Hierarchy E Departmental Structure F Budget Considerations G Material Management Process H Vendor Identification I Receipt, Inspection and Storage J Inventory Turnover K Stock Verification L Issue and Distribution M Disposal/Condemnation N Minimizing loss and Pilferage O Consumption Pattern P Documents Generated

A. Scope : The scope of the department relates to effective management of material. It covers purchasing and management of Hospital Consumables, Printing & Stationary; Hospital wares Medical and Non Medical equipments pertaining to the needs of the entire Hospital.

B. Purpose: The purpose of the department is to plan for, acquire, store, move and control materials to optimise the usage of facilities and capital funds and to provide customer service in accordance with organisational goals.

C. Responsibility: Medical Superintendent (Male) and In charge – General Store

D. Departmental Hierarchy:

Medical Superintendent (Male)

Store In charge

Store Attendants.

E. Department Structure :

The wider function of the material management department of the hospital comprises of two basic functions – a) Purchase Function b) Stores Function .The hospital has integrated the purchase and the store functions into one department

Material Management

Purchase Central Store

F. Budget Considerations:

Office of the Director General, Health and Family Welfare is responsible for provision of budgetary considerations. The budget allocation for each financial year is informed to the hospital so that the expenditure planning can be done according to the provisions in the budget.

In addition to the budget allocation from the office of the Director General, Health and Family Welfare Services, the Chief Medical Superintendent of the hospital is empowered to purchase items in the hospital’s consumption list upto maximum of Rs.15000 per item.

G. MATERIAL MANAGEMENT PROCESS:

1. Demand Forecasting and Planning : The Hospital uses a large variety of material for patient care .The department undertakes standardization of products i.e grouping items of similar specifications together and hence it facilitates the department to forecast and plan its material requirements. The material used in the hospital is broadly classified into seven categories:

3 Manual of Operation Quality Operating Document No : Process RML/GS/01 Dr. Ram Manohar Lohia Combined Manual of Operations Date of Issue : Hospital , Lucknow General Store 15/1/2008 a.)Capital Assets. b)Consumables c) Hospital Wear d) Printing and Stationary e)Linen d) Instruments f) Consignment.

2. Purchase: The Department undertakes centralized purchasing of all materials excluding pharmaceutical items. The Material Management department purchases the items on the following two basis: a) Reorder Level b) Request for purchase of items from the User Department or Management.

H. Vendor Identification:

1. General Items such as Stationeries, Consignment item etc:

As per the policy of the department of Health and Family Welfare, Government of Uttar Pradesh all general items required by the hospital are purchased from vendors registered with Uttar Pradesh Upobokta Samiti Ltd (A Government of Uttar Pradesh Affiliated Institution).

The Samiti maintains a list of vendors for various items identified by means of annual tender which is provided to the hospital. The rates for each item are fixed by the Samiti through the tender invitations.

The hospital purchases the required products from the identified vendors at the rate fixed by Uttar Pradesh Upbokta Samiti Ltd.

2. Equipments:

The decision to purchase any equipment for the hospital is taken by a multidisciplinary committee known as purchase committee. The committee evaluates the need for any equipment in commensurate with the scope of services provided by the hospital.

The procedure for purchase of equipments is as follows:

Equipment Cost (in rupee) Purchasing Authority

5,00,000 and above Central Medical Store Depot .

1,00,001 – 5,00,000 Hospital will purchase after written permission from Director General,Health and Family Welfare. Tender Application will be invited.

15001 – 1,00,000 Hospital will purchase through tender.

2501 – 15000 Hospital will purchase through quotation from three supplier of the required product.

Upto 2500 Local purchase from a well know supplier

3. Tender procedure:

Invitation of tender is made in popular newspapers and in the website of Health and Family Welfare Department, Government of Uttar Pradesh. i. Tender pre-requisites (eligibility criteria):

1. The interested vendors should have a minimum of three years of experience in supplying the bided product. 2. Should provide a declaration along with proof for having no dues accruing to Income Tax and Sales Tax. 3. Declaration in the stamp paper as to whether the bidder is the manufacturer of the product or is a reseller. If manufacturer then the registration certificate for the same has to be furnished. If reseller authority from the manufacturer along with the registration certificate of the manufacturer has to be submitted. 4. Terms and condition for Annual Maintenance contract should be clearly stated and the organization should be willing to submit 10 % of the equipment value as security deposit for the AMC period. 5. The company should a service center in Lucknow. 6. A declaration has to be given by the company in stamp paper regarding the following : a. Price quoted is lowest and the company has not sold the product to anyone at a cost lower than the quoted price. b. The model of the product is not obsolete in nature. 7. The bidder should be ready for technical demonstration of the product incase asked for by the purchase committee. 8. The vendor/manufacturer should be registered with one of the following authorities : a. Director of Industries , Kanpur. b. Central Medical Store Depot ,Lucknow c. DGS & D , New Delhi. Incase the vendor/manufacturer is not registered with either of these authorities ,then they are required to submit an amount equivalent to 2% of the product cost along with the earnest money. 9. The vendor/manufacturer should furnish a list of users for the product along with the tender application.

5 Manual of Operation Quality Operating Document No : Process RML/GS/01 Dr. Ram Manohar Lohia Combined Manual of Operations Date of Issue : Hospital , Lucknow General Store 15/1/2008 ii. Award of tender:

All tender application are scrutinized by a multidisciplinary committee consisting of Director, CMS, MS, Responsible of user department and other members as nominated by the Head of the hospital who after evaluating each tender application in comparison to the eligibility criteria prepare list of vendor who would be called for product demonstration.

After the demonstration of product, the committee prepares a list of vendor from among those selected for technical specification for price negotiation, there after tender is awarded to the vendor fulfilling all the eligibility criteria and quoting the lowest price.

4. Purchase of equipments through quotations :

The hospital maintains a list of vendors for items price below rupees fifteen thousand. The vendor list is prepared on the basis of following criterias:

1. The vendor/manufacturer should be preferably located within Lucknow. 2. The vendor/manufacturer should be ready to supply the product at a cost lesser than the maximum retail price of the product. 3. The vendor/manufacturer should have a reputation for fair trade practices. 4. The vendor/manufacturer should be able to supply the product at a short notice incase selected.

Incase of such products the identified vendors are informed and a quotation is invited. Once the quotation is received the same is evaluated by the multidisciplinary committee. Purchase orders are issued to the vendor/manufacturer quoting the lowest price.

5. Emergency Purchase:

Incase of immediate need to buy any item the Chief Medical Superintendent (CMS) has to authorize such need .After receiving the instruction for immediate purchase of any item the Incharge Clerk first checks for the supplier of the product among the registered list of vendors .If the supplier of the item is available among the registered vendors, the supplier is informed to supply the product immediately.

Incase the required items is not available with the registered vendors of the hospital , the in charge clerk contact the most accessible supplier of the product and purchase the items in order to cope up with the emergency need. Once the need is over and the future requirement of the item is foreseen, normal purchasing procedure is followed.

I. Receipt, Inspection and Storage:

The vendor supplies the materials at the Central store unless it is some equipments (medical or non medical) etc which are directly installed in the site of operation.

When ever an item is delivered the same is verified in the presence of the Store Incharge, representative of the supplier and representative from the purchase committee of the hospital . Verification is done to ensure that the item is as per the order placed etc. i. The following procedure is followed while receiving the supply:

Receipt of supply in Specific Locations

Verification of supply against suppliers invoice

No Is Verification Yes Cleared? Yes/No Suppliers Invoice is forwarded to Supplier invoice is not the Security Department for acknowledged Clearance.

Items is returned immediately. Store Incharge approve the invoice and forward it for recording

Actions are taken as per the Transaction is recorded in the terms of the MOU Goods Inward Register.

Invoice is forwarded to Account for Payment and the same is recorded in the Bill Dispatch Counter ii. Consignment Items :

After receiving the materials they are kept in the respective department on the basis of delivery challan. When the items are used for the patient, the respective vendor is notified to send the invoice which should include the Patients Name, Inpatient Number etc.

Unused Items are returned back to the vendor through the general store as per the agreed terms with the Vendor.

Supplier Reevaluation – Every Vendor with whom the hospital enters into agreement for the supply of materials are evaluated on a periodic basis so that their service standard could be determined .Any deviation in their performance as per the MOU are informed to them for correction .Incase they do not adhere to it appropriate actions are taken within the purview of the MOU entered with them. iii. Storage:

The Central Stores undertakes centralized storing of all items except pharmaceutical products, food items and bulk equipments (which are directly installed at the site of operation).

Arrangement Of Items : The items is designed in predetermined/designed racks inside the Central Stores . Items such as radiographic films, spirit etc which are inflammable are stored in separate location.

Stock Location Method : The items which are frequently used items are arranged are located in most easily accessible area so as to facilitate its quick identification and delivery to the user department.

J. Inventory Turnover:

The Department has to keep a track of the proper turnover of the inventory so as to ensure efficient utilization of the item stored.

Stock Turnover details are calculated on a monthly basis for each month and the report is submitted by the store incharge to the Medical Superintendent. The Department calculates the inventory turnover ratio by dividing the total value of inventory in rupees issued by the department by the value of the closing stock at the end of the month.

K. Stock Verification – Verification of stock is done every six months .It includes ground balances with the figures show in the stores ledger .However the department prepares a monthly report of the Purchase summary (category wise ) , Items issued during the month and the Closing stock at the end of each month and submits the report to the Medical Superintendent for evaluation.

8 Manual of Operation Quality Operating Document No : Process RML/GS/01 Dr. Ram Manohar Lohia Combined Manual of Operations Date of Issue : Hospital , Lucknow General Store 15/1/2008 i. Inventory Control - The Hospital recognizes the importance of adequate supply of items in providing quality healthcare to the patients. For efficient management and control inventories the Material Management Department as classified on the basis of their cost value which is as follows :

Classification Cost Value (in INR) A

The department low stock level for very high value items, usually they are purchased directly when the need arises , however the hospital maintains a list of vendors for the products so that purchase of the product can be affected quickly .The department maintains higher value of stock for items which are frequently used in the hospital. ii. Lead Time: The lead time for general items is almost zero as the hospital at the time of awarding contracts includes a clause for the same; hence the suppliers are legally bound to supply such items at the earliest. For items like Laboratory reagents the lead time is 7days. The lead time for equipments and other such items is usually higher as it involves not only delivery lead time but also administrative lead time as administrative can take some time before giving the final approval for its purchase. iii. Re-order level: The physical position of the stock is reviewed every month .Orders are placed depending on the stock on hand, rate of consumption and the lead time in such a way that the stock does not fall below the usage rate prior to the next review .

The reorder level for each items fixed is fixed on the basis of its average consumption. The reorder level for each item has been calculated and can be referred for further details.

L. Issue and Distribution:

Indent request placed by the user department

Store Receives request and the items is searched

NO YES Item is available in store ? 9 Manual of Operation YES/NO Quality Operating Document No : Process RML/GS/01 Dr. Ram Manohar Lohia Combined Manual of Operations Date of Issue : Hospital , Lucknow General Store 15/1/2008

Items are dispatched Procedure for Purchase of the item is followed. Items are collected by the Department Representative /House Keeping Staff

Transaction is recorded in the Material Issue Register

Medical Equipments ,Computer Systems etc are purchased and directly installed at the site of operation .In that case after successful installation of the item the transaction is recorded in the Material Issued Register.

M. Disposal/Condemnation: Incase of non consumables like capital equipment ,instruments, linen , furniture etc excess stock may build up in the user department in that case the user department returns the excess stock to the stores so that the same can be distributed to other departments. The Head of the User Department is responsible to ensure that there is no misuse or wastage of any items .

The hospital also undertakes periodic write off of the items which are not fit to be used. The store maintains complete details about each item in the hospital including their expiry dates. The store immediately disposes any expired items.

The user department inform the store in writing about any equipment etc which are to be disposed .The store immediately makes arrangement for removal of the same from the user department. Before removing the equipment Cannibalization of parts is done so that the usable parts of discarded machine can be used in future for other machine of the same type.

Items for which there is a scrap value are sold .The store also takes necessary steps to destroy or burn expired items so as to prevent its unethical reuse.

N. Minimizing Loss and Pilferage:

Access to store is limited. Only authorized store personals can enter the main storage area. Every day evening before the store personals leave ,the closing stock at the end of the day is evaluated and the store is locked .No person except the Store Incharge is allowed to break the seal .Incase of Emergency the seal can be broken with the permission of authorized person.

The hospital has also introduced a system of internal audit to keep a close vigil on the activities of the store .The Internal Audit Committee makes periodic audit of the store at the end of every quarter .The Store Official has to submit detailed report to the Audit Committee.

O. Consumption Pattern:

The General Department makes graphical analysis of the consumption pattern of different kind of products every month and compares the same with that of the previous month so as to be able to understand the change in the consumption pattern of the items for different category of items. Consumption pattern analysis helps the department in demand forecasting and material planning.

The total quantity consumed for each category of item is calculated The Audit Committee also evaluates the performance of the department to satisfy the needs of the user departments .the performance is evaluated on the basis of the following parameters which are: 1. Timely availability of material 2. Quality of the material 3. Number of occasions when stock out have occurred.

P. Documents Generated :

1. Internal Indent Request. 2. Comparative Statements. 3. Purchase order. 4. Good Receipt Register. 5. Goods Issues Register.

12 Manual of Operation