CHAPTER ONE

Introduction

1.1       Background of Study

Inventory Management  is a key management function in administration of health institutionin Nigeria. The purchasing, storing, distributing and controlling of drugs are activities in drug management process which have the ultimate aim of improving patient care in the various hospitals. Hospital pharmacies throughout Nigeria are experiencing inventory problems that have resulted in wastage and shortage of drugs. The obvious outcome of this problem is a retrogressive effect on patient care due to delayed procedures and drug substitutions (Fox and Tyler 2003).

While some drug shortages are uncontrollable (e.g. due to a natural disaster), others can be controlled. Inventory, which is a result of the purchasing process, must be well controlled. However, based on daily activities performed in the hospital pharmacy, the main concerns regarding managing inventory occur during purchasing process. It is problematic and time consuming to decide when and how much to order.  Improper inventory management can also result from the procurement expertise of those managing the inventory (Alverson, 2003). Although pharmacists in hospitals have expertise in the efficacy and treatment protocols of drugs that are administered to patients, they are also tasked with managing, ordering, and producing the drugs that are ultimately dispensed to

patients.                    

The pharmacists serve as the gate keepers of drug distribution by ensuring the accuracy and appropriateness of prescribed medications. Pharmacists must make decisions regarding their inventory levels on how and when to produce or purchase drugs in response to, or in anticipation of, patient demand. Frequently, these decisions are made by measuring drug utilization from historical data and devising a common inventory level

(measured in days of inventory) which makes the process easy to manage but not efficient (Baumer et al. 2004). 

However, there is additional information available that pharmacists are currently not using to make inventory decisions. Drug demand is a function of the patient‘s condition and the prescribing protocols of the physician. The patient‘s condition provides a forecast of their drug need during their length of stay. The consumption of a particular drug on a given day is conditional on the mix of patients in the hospital that require this drug and may be for more than one unit of drug. Since drug usage changes over time and is not known with certainty, the daily demand is dynamic and stochastic.

Therefore patient care could be compromised if the pharmacy department of the hospital fails to execute proper inventory management practices, so that drugs when needed may be readily available. This is because there is a direct linkage between the patient-care and the efficiencies of the various units in the hospital; Gillerman and

Browning (2000) found that there was an interrelationship between the patient‘s condition and his/her drug utilization which could mean that drug unavailability may result in worsening patient condition in the hospital, translating into increased patient stay at hospital.

There are five hundred and thirty (530) health facilities in the Abuja including one hundred and nine (109) hospitals that provide a total of four thousand, three hundred and eighteen (4,318) beds for patients (CHMI/PPME-GHS, 2007). The health institution the Region are from all the four different types of hospital operations currently in Nigeria namely: Government Hospital, Mission Hospital, Quasi Government hospital and Private Hospital. This study therefore seeks to unravel how Inventory Management  at health institution the Abuja affect patient care.

1.2        Problem Statement  

Even though all health institution the Abuja have pharmacy department to ensure proper inventory management in the hospitals, not much is known about the effectiveness of Inventory Management  practices at play in the various pharmacy departments and it onward effects on patient care in the health institution the region. It is a known fact that patient care cannot be effective without an efficient Inventory Management  practice. Nevertheless, what is unknown is how drug inventory is managed in health institution Abuja and how patient care in the region is affected by it. The sort of Inventory Management  in various pharmacy departments in the region leaves much to be desired. It is this noticeable gap in the literature that this research seeks to fill. Thus, this study seeks to unravel how Inventory Management  in health institution the Abuja affects patient care.  

1.3        Objectives

The objectives of this research work are as follows:

1.      To find how the pharmacy departments at the various health institution Abuja were managed. 

2.      To determine how drugs are purchased, stored and distributed in the Pharmacy

Units at the various hospitals. 

3.      To determine how inventories are controlled at the pharmacies in the hospitals  

4.      To determine whether Inventory Management  at the hospitals affects

patients‘ accessibility to essential drugs in the hospitals. 

5.      To determine whether Inventory Management  at the pharmacy units of the hospitals has any effect on patients‘ recovery process.

1.4        Research Questions

This study aim at addressing the following research questions:

1.      How are the pharmacy departments at the various health institution Abuja managed?

2.      How are drugs purchased, stored and distributed in the Pharmacy Units at the various hospitals? 

3.      How are inventories controlled at the pharmacies in the health institution the Abuja? 

4.      How do Inventory Management  at the hospitals affect patients‘ accessibility to essential drugs in the hospitals? 

5.      Is inventory management at the pharmacy units of the hospitals having any effect on patients‘ recovery process?

1.5       Relevance of the Research

Purchasing includes the selection of right quality products and knowing the right quantity, when to order, at what price and from which source. Deciding the time to make an order, from now on is referred to as the reorder point (ROP), takes two major factors into consideration – the length of lead time and demand during lead time. Nevertheless, determining ROP for the hospital pharmacy is not simple, as the demand is difficult to accurately forecast and lead time is fluctuated, depending on suppliers. 

The regular ordering routine reveals that ROP is determined somewhat based on past usage. Yet, there is no specific policy to facilitate the determination, but it is done based on the staff‘s familiarity of the process. If ROP is not carefully handled, unexpected situations of stock out and overstock might occur. Shortage of vital medicines used for severe illness is a great cost for the hospital since some medicines are scarce and they are not always available in the markets. In response to stock out situation, local emergency purchase must be made which is costly to the pharmacy department.

Another difficulty the staffs have to encounter when performing purchasing process is how much to order. Based on the basic knowledge of inventory management, ordering too much will bring up carrying cost and ordering too little will lead to higher ordering cost. A lesson has been learned from too large orders in the past - some overstocked items have been found after the acquisition of the hospital. 

There are currently major concerns regarding Inventory Management  in the pharmacy department – when an order should be placed, and at what quantity. It is challenging to achieve drug procurement objectives with regards to costs, quantity, quality, and delivery. However, considering the hospitals‘ personnel and technology unavailability, the implementation of a successful patient care through an efficient inventory management could be problematic in the Abuja. Hence, this research will provide the needed empirical evidence for or otherwise of the above statement. 

1.6         Organisation of Thesis

This work is presented in five chapters. Following the general introduction in chapter one, chapter two explores the literature review which relates to the study of the previous secondary data available on this topic. This chapter also focuses on what supply chain management is all about; inventory control, the cost of inventory, the push and pull systems of inventory, and the general overview of the pharmacy department. Chapter three establishes the method to be adopted to carry out this study and thus it talks about the appropriateness of quantitative research as compared to the usage of qualitative approach for this particular research. 

Also the use of questionnaire survey has been reasoned in this chapter. Apart from this, the criterion for the selection of the sample size is disclosed.  The analysis and interpretation of the responses which were collected during the interviews are captured in chapter four. The summary, conclusions and recommendations are presented in chapter five. This chapter includes the limitations that were faced while conducting this research and also states an extensive area appropriate for future research and finally divulges the managerial implication which would facilitate in a better management of the subject area.

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