ABC Analysis for Surgical Inventory Management in a Corporate Hospital Pharmacy

Introduction: Effective inventory management is vital in healthcare settings, particularly in hospital pharmacies, where the availability and proper management of medical supplies have a direct impact on patient outcomes. Among inventory management strategies, ABC analysis has proven to be an effective tool for prioritizing and controlling inventory. ABC analysis, also known as Pareto analysis, categorizes inventory items into three groups: A, B, and C. This classification is based on the annual consumption value of the items, allowing organizations to focus on the most critical items (Category A), moderately important items (Category B), and less critical items (Category C). Aim and Objectives: This study was undertaken to address the lack of an ABC classification system in the surgical pharmacy of a corporate hospital, aiming to improve inventory management and resource allocation. However, maintaining an extensive inventory can be costly and challenging without proper management strategies: (1) To identify the cost of each surgical item in the pharmacy and (2) To categorize and implement the ABC inventory management technique in pharmacy. Methodology: This prospective study was conducted in the surgical pharmacy of a corporate hospital. The secondary data required for the study were collected from the ledger of surgical items. The study spanned 5 months, involving a sample size of 101 surgical items. The ABC analysis was employed to categorize the items based on their annual consumption value. Observations and Results: The annual consumption of each drug was calculated by multiplying the unit cost by the annual consumption rate. These figures were then arranged in the descending order of their rupee value. Items were categorized into A, B, and C categories according to their total cost consumption, with A consuming 70%, B 20%, and C 10% of the budget. The cumulative frequency and percentage for each category were determined to finalize the classification. The ABC analysis revealed the following categorization: (1) Category A: 14 items (14%) consuming 70% of the annual budget. (2) Category B: 19 items (19%) consuming 20% of the annual budget. (3) Category C: 68 items (68%) consuming 10% of the annual budget. Conclusions: This study demonstrates that the ABC analysis is an effective inventory management tool in a hospital pharmacy setting. The hospital can allocate its resources more efficiently by categorizing surgical items into A, B, and C categories based on their annual consumption value and budget impact. Despite being only 14% of the total, items in Category A consume the majority of the budget (70%), highlighting their critical importance. Conversely, Category C items, which constitute 68% of the total items, only consume 10% of the budget, indicating their lower priority. Implementing ABC analysis aids in prioritizing inventory management efforts, optimizing stock levels, and improving overall resource allocation. Despite its challenges, such as accurate classification and data accuracy, ABC analysis remains a vital tool for enhancing inventory management processes in the healthcare settings.