LMGT211: LABORATORY MANAGEMENT

WEEK 13: MATERIAL MANAGEMENT

1ST SEMESTER | S.Y 2023-2024
Instructor: PROF. PAMELA SENGSON RMT, MLS, (ASCPI)

MATERIAL MANAGEMENT the proper storage spaces per material, which is written in the
boxes or instruction manuals, if it is a machine*
- Systemic process of overseeing and controlling the acquisition - The most economically advantageous price is obtained.
and utilization of supplies to ensure both availability and cost- Hindi naman porket cheapest price, that will be the one you’ll be
effectiveness. getting. You should also consider the quality, model, brand and
take note of that in totality in getting your supplies, equipment, or
Aims: machines*
▪ To have the right material
▪ At the right quantities Sequence of Purchasing
▪ At the right time
▪ At the right price
▪ From the right sources
▪ At a least cost
Product
Orders Receive
Specification

- At the hospital level, this is handled by a centralized material

management department organized into two sections: Inventory Record
A. Purchasing - oversees the ordering of supplies and the
processing invoices from vendors or suppliers.
▪ Invoice is an itemized commercial document that
records the products or services being delivered to the
customer. This contains the total amount due and the - Sequence of purchasing starts with product specification, followed
preferred payment method. Invoice can be sent by the by orders, receiving that orders, and once you received them, you
seller either in paper or electronic to the customer* record and log it in your inventory system*
▪ Invoice and receipt are not the same. Invoices are
issued prior to the customer sending the payment while 1. Product research and specification (enquiries and quotation)
receipt is issued once the payment has been received.
Invoice acts as a request for payment while the receipt - In order to determine the best products for laboratory use, time
acts as a proof of payment* must be spent on product research leading to the development of
B. Stockroom - maintains the security and inventory levels product specifications.
and issues supplies throughout the facility. - Product specification should be prepared after you have
thoroughly researched or studied what you need in your
Purchasing: laboratory. Studying or researching helps assure that there is
adequate quality of purchased reagents and supplies. In this step,
- Clinical laboratories as a business requires raw materials for you are going to list down all the materials or equipment needed
successful operation. to be purchased*
- Whereas equipment idled by breakdowns of lack of supplies, is an - For example, you are lacking syringe for the next week. So hindi
economic loss for business. The same situation in the clinical lang naman sasabihin sa supplier na kailangan mo ng syringe, you
laboratory can seriously interfere with the delivery of patient care have to specify. What are the specifications or types you will be
(which is the most important factor in the clinical laboratory). needing for a syringe, 5mL, 3mL, or 10mL? How many will you be
▪ Because if you lack supplies, the workload will be impeded, needing? Kung kailan mo ba gagamitin ‘yung mga syringe. If
and you will not be able to cater the patients that equates to continuous, will your replenishment be weekly, monthly or
loss of profit* annually? What is your preferred brand and model? Sa Bambang
▪ It is important for us to maintain a good materials lang ba tayo kukuha? Do you want brand Cardinal or Terumo?
management* - All of these will be studied in the product research and
specification phase*
Goals of material management - A similar process of evaluation and product specification is
necessary prior to the purchase of major equipment, including
- Supplies arrive in a timely manner. This depends on contract machines that can range from thousand to a million because your
your laboratory has with your supplier, it can be periodic, weekly machines also include reagents. In addition, the following
or yearly period* considerations are important:
- Spoilage is reduced to a minimum. You can do that by 1. Written specifications – must include detailed description
thoroughly inspecting the expiration dates of your supplies and of required equipment. Take note that specifications must be
materials. Spoilage is usually caused by supplies or reagents na written and never be made by verbal agreement, since
hindi nakita na they are nearly expiring* verbal agreement is as good as nothing when in comes with
- Back orders and delays are avoided. Back-order items means you purchasing a supply. ‘Pag sinabi sayo ng supplier today,
that they are out of stock, and it is expected to be delivered by a pwedeng maiba yan later on. Nakakalimutan ng ibang vendors
certain date once it is back on stock. If the suppliers said to you na ‘yun pala yung sinabi nila sainyo because supplier/ vendor
that ‘The supplies are available in our company, but it will arrive gives different prices to different customers, depending if
on this date’, that is already a no for you. When you’re going to you are a government institution, private institution, and so
order from a specific vendor or supplier, take note that you should on. That’s why it is important that you receive specifications
ask if it already on hand, so that delays can be avoided. Back written and in black-and-white*
orders only cause delay in the arrival of materials and supplies* 2. On site visits to see equipment operating in other
- Storage space is used to the best advantage. You should laboratories is encouraged. Major equipment, such as
consider storage spaces since it serves as your warehouse or stock your machine, hindi naman ‘yan agad na hindi mo pa nata-try
rooms. Warehouse and stock rooms are important because it eh ipapa-avail na sainyo. Take note that the price is from
provides an ideal environment for your supplies and materials. hundreds of thousands to a million so isusugal mo ba yung
Some material includes ideal temperature from room temperature ganoong kalaking presyo na hindi mo pa nata-try yung kanilang
up to refrigerator or freezer temperature. You must take note of equipment? They will provide you a demo machine, which is
usually a brand-new machine, kaya if it is brand-new, it will
 work excellently at the beginning if the quality is Purchasing of supplies
substandard only. It is good that you see other laboratories
having that equipment because you can fully know the - For budgeting purposes, the products that needs specific time and
quality of that machine once it has already been working for price criteria are classified as supplies. Items that fall outside
a year or two. Makikita mo ‘yung mga parts niya if it is still these criteria are classified as capital items.
excellently working even after a few months or years. Pwede
mo naman siyang irequest sa vendor mo na pwede mo bang Moreover, supplies may be classified as:
tignan sa other laboratories or satellite laboratories* A. Items that are consumed w/in 1 year or have a shelf life of
3. An environment necessary to accommodate the less than 1 year.
equipment must be prepared in advance. If you are o Meaning that the item has an expiry date of just a year
going to purchase a chemistry analyzer, alamin mo na in or below*
advance what is the type, if it is floor-type or counter-type B. Items consumed w/in 1 year, as established by the
equipment and what is the ideal temperature, what should be comptroller even though their shelf life exceeds 1 year.
the space in every equipment; kailangan mo na siyang o Comptroller means a high-level executive that oversees
iprepare beforehand baka kasi magre-request ka ng demo the accounting and financial tasks, or even the product
machine then wala ka naman palang paglalagyan* managers, they’ve established that this example
4. A more complicated decision is whether to buy a reagent, nakalagay sa kanya is may 2 years expiry date,
major equipment. The major factor here is the price. You but ‘once opened’, the stability of that reagent is just
have to consider if you really need that in your laboratory or 15 days, 30 days, commonly encountered in chemistry
if gusto mo lang ba magdagdag ng machine. Again, we’re going section’s reagents such as calibrators, controls (normal
back to the product research and specification. If you really and pathologic controls)
need that and it is required by the DOH requirements, you
should proceed in buying the equipment* The following are considerations in purchasing supplies:
5. Complete instruction manuals should be obtained 1. Only authorized staff members who are familiar with the
with the instruments, as well as the preventive quality of service and reliability of supplies should place
maintenance manuals. For your equipment, machines and orders.
supplies to last, you should maintain them. Preventive o Only authorized staff members should be the
maintenance manual includes procedures and calibration, purchaser.
daily, weekly or annual maintenance if needed, kung paano 2. Delivery schedules are a major factor in determining
siya nilisin by part hanggang sa kaloob-looban. The quality whether a purchasing system is in or out of control.
controls and quality assurance steps are also stated in this 3. High use items should be delivered frequently.
manual. Complete instruction manuals and preventive o Example of high use items of MedTech are cotton,
maintenance manuals should be available* alcohol, syringe, and torniquet.
o They are the ‘consumables’ and they should be
Materials and equipment delivered frequently. Mawala lang yung isa diyan can
impede your workflow*

- An excellent method of doing this and can save the laboratory

time and money is through a purchase order.

2. Purchase Order

- Purchase order is a document authorizing the purchase of a

product or service (e.g., maintenance of the equipment, cleaning
of machines) from a vendor or supplier*

- Purchase order could be classified as release orders or standing

orders:
A. Release order and manuals in which the company agrees to
deliver goods at a pre-determined price notified by the
laboratory.
o Example you are a MedTech in one of the primary
- Some of the few materials and equipment that you will encounter laboratories in Valenzuela and you have a agreement
once you work in the laboratory. You’re not just going to use them; with your vendor that every time you are going to order
you’re also going to be tasked with their inventory overall a syringe, one box of Terumo 5cc syringe, the price will
materials management* always be Php 1,500.00. You already have a pre-
determined price and every time that you are going to
Laboratory supplies and equipment order in that vendor, ‘yun lang yung palaging presyo na
ibibigay nila sainyo*
B. Standing order is an annual contract in which the
companies agree to deliver goods at a pre-determined price
and on an established schedule.
o Annua contract meaning your contract will renew after
a year. Puwede bang magbago yung prices na
napagkasunduan ninyo? Pwede o pwede rin namang hindi,
depends on the renewal of contract and kung anong
mapaguusapan niyo with your vendor*
o Let’s just say included in that annual contract, the pre-
determined price indicated is Php 1,500.00 per box of
5mL Terumo syringe, and then every week (assume
that this is your established schedule) you will deliver
that box to us. Once the annual contract expires, you
- Major equipment includes machines depending on the sections can renew or look for another supplier depending on
available in your laboratory* your preference*

Page 2 of 4
3. Receiving and accounts payable
Invoices/ Bill
- Goods should be unpacked and inspected as soon as possible to ▪ Indicates the products, quantities, and agreed prices for
ensure that everything is delivered or that some products or services the seller has provided the buyer. An
acknowledgement of back ordered items is made. invoice indicates the sale transaction only.
▪ A good practice is that you do this while the delivery ▪ Before proceeding with payment, you will be given invoice
personnel is still there para meron kayong witness. ‘Wag so you can track the right product, the right quantities are
niyong papaalisin yung delivery sales person nang di niyo present, and the agreed upon price is stated before you
nacheck na parallel all the materials that you have received proceed with paying*
with the receipt, so that you can ensure that everything is ▪ Not the same with receipt, since receipt are given after you
delivered or that some acknowledgement of back ordered have paid for the service or product*
items is made, kung meron man and also, if there will be
damaged or defective goods, you can identify them as soon 4. Records and inventory control
as possible. Bibigyan ka nila ng replacement credit if there
are damages, defective goods, or missing items* Inventory management is a continual process of:
▪ Check if they are in right quantity, right brand or model; if 1. Checking stock levels
there are deviations from those, you can return it to them 2. Rotating stock (somewhat a system of arranging your
and make sure that they are also documented in paper, hindi supplies from the oldest units or oldest received in the
lang verbal* inventory, so that it will be used first before the newer once)
3. And minimizing the cost of carrying inventory.
Three pieces of information must agree before the company's bill
will be paid by the most accounts payable systems: - Inventory check is performed at least once a year, but it still
▪ Purchase request must agree with the invoice. depends on the policy of your institution and also the type of
▪ Invoice must agree with the packing slip. material. In the laboratory, it is best that we check the inventory
▪ And all of this must agree with the Final bill from the daily because we have a lot of consumables and if that supply is
company of your vendor or supplier. depleted, it can impede again the workflow; also to know when to
replenish our supplies*
- Huwag lang pirma nang pirma especially this is concerning money
you’re going to pay if you’re the owner, or the laboratory. This is Three (3) Methods to Track Inventory Levels
very crucial. You have to check if it they are parallel with each
other, and if they are all good naman, you can sign kasi kung meron 1. Perpetual system – you keep account of the inventory every
diyang mga discrepancies, especially if you are the employee or time the product is used (ex. pregnancy test kits, syphilis test kits,
the staff of the laboratory, you must be held accountable for those Hepa B surface antigen test kits, Hepa B screening tests). Every
missing, kasi nag sign ka e. Signing means you are acknowledging time you are going to test a patient, you will get a kit from a box
that all the received supplies are complete and in good conditions. and log it to your inventory system*
Kung meron mang mag deviate ‘dun sa mga qualities and the 2. Periodic system – there is period; can be once a week or
numbers, you will compensate, either you’re going to pay out of depending on your preferred time (yearly, monthly), or at other
pocket or they will get it out of your salary* specified time the stock level is counted, and appropriate supplies
are ordered. Example on Nov. 10, 2022, you opened a pack of
Documentation needed in Material Management System EDTA and your balance is 10, so 10-1 is 9. If you’re going to check
(MMS): after a week, Nov. 16 or 17, pagtingin mo ng balance is seven na
lang. In between Nov. 10 and Nov. 17, nakapagbawas ka pa ng
Enquiries (plural form of inquiries) dalawa*
▪ Enquiries lead to getting information from a vendor / 3. Random checks - are used to document the value of supplies at
supplier for the requirement at hand. a specific time. This is also done as verification procedure; key
▪ This is the start point of a sale or purchase process. part of financial accounting; useful in confirming the accuracy of
Enquiries lead to establishing a connection with the right perpetual system because your perpetual system can easily
vendor or supplier in order for you to get the next become distorted if you’re not going to maintain it meticulously*
documentation, which is the quotation* ▪ Let’s say every time you’re going to use pregnancy test, you
need to get one kit and you need to log it, e paano kung toxic?
Quotations Dalawa na pala yung nakuha mo at ang na-lag mo lang ay isa.
▪ Quotations consist of various pieces of vital You can counter check it or verify if your perpetual system is
information of a requirement towards a accurate by using random checking*
sales/purchase. Quotations state important information
such as price, delivery times, delivery details, payment Inventory system are set at low and high points:
terms, taxation etc.
▪ You can ask for this in different suppliers and you can 1. The low level is that point at which on hand supplies are
compare it. Hindi naman porket nag ask ka ng quotation from sufficient to carry the laboratory through until good or orders are
one vendor, hindi ka na puwedeng mag ask to others. You received.
email or call them so you can compare prices* ▪ You should avoid having low levels and you can do that by
▪ In other institutions, especially in government institutions, having a good material management system*
yung mga vendors pa ang lumalapit sainyo. Meron silang 2. The upper limit is that level which will meet the laboratories
tinatawag na bidding, the best price and quality will win* requirement for a longer period of time, such as several months to
a year.
Orders ▪ Is it good to have inventory system at a upper limit? It
▪ When the purchase order of the buyer and the sales depends if you can still have a spacious storage or
order of the seller agree, the orders become a contract warehouse; and you can consider the expiry date, if longer
between the buyer and seller. time ba ‘yan, several months to up to a year, and just ensure
▪ In business or in the commerce field, order is a stated na walang near expiry ‘dun sa mga materials because if there
intention, either spoken or written, to engage in a are, it can lead to wastage of supplies or spoilage of your
commercial transaction for a product or service* supplies*
▪ Orders if it is from the buyer’s point of view – this expresses
the intention to buy; this is also called purchase order* The Primary Factors Determining The Said Limits Are:
▪ In the seller's point of view – intention to sale; the order is 1. Anticipated delivery time for each item.
referred to as sales order* 2. Available storage space
▪ When the purchase order of the buyer and the sales order of 3. The shelf life of the item
the seller agrees, the orders becomes a contract between the 4. The anticipated rate of usage
buyer and the seller*

Page 3 of 4
 LIFO, FIFO, FEFO ISSUES METHODS: syringe, divide that by 365 days, you will get your average daily
use of syringe*
- Inventory management is a crucial function for any product- C. Cost of ordering - the cost of running a centralized purchasing
oriented business. Common inventory handling methods include: department is directly tied to the number of purchase orders
▪ First in, first out (FIFO) —this is the most common placed, and the associated work involved with keeping track
technique. invoices as products are shipped and received.
o Kung ano yung unang nabili, ‘yun din ang unang ▪ Can be obtained by dividing the expenses of the
gagamitin. Inventory items are used in order they are purchasing section by the number of purchase orders
purchased* issued*
▪ Last in, first out (LIFO) —this is common among non- D. Annual holding cost - this involves decisions based on bulk
perishable items like petroleum, minerals, and metals. orders, space utilization, and whether it is better to have
o The last to enter your system, organization, or the product on hand or in the supplier's warehouse.
purchased is the one used first* E. Cost per unit - factors such as quantity discounts and container
▪ First expired, first out (FEFO) — materials are sold based size affect this decision. Dividing the purchase price by the
on date they should be consumed regardless of when you container size provides this value.
have purchased it. F. Lead time - it influences the minimum inventor that must be kept
in stock, as well as the quantity that needs to be requested.
Stock Replenishment Techniques ▪ The amount of lead time is generally the amount of time in
between when a purchase order is placed to replenish
- Two techniques are available for determining how and when to
products and when the order is received in the laboratory*
replenish stock:
▪ When the supplier or the vendor said that the lead time is a
1. Minimum-maximum - to establish a set point at which
month, 30 business days not considering the weekends and
inventory is to be recorded and a reorder to level to be
considering working days only (calendar days is when all
maintained.
days are considered, even the weekends and holidays). Let’s
o In this strategy, the inventory levels are continuously
just say that your lead time is 30 calendar days, dapat
reviewed and as soon as the stocks fall below the
magsisimula lang ‘yon when you have given them the
pre-determined level or reorder point that is the
purchase order (for example November 1), dapat more or
time you should replenished your stocks*
less December 1, nasa laboratory mo na ‘yung products that
o You just have to set a minimum level so that you
you’ve ordered*
known when to reorder, then you set a maximum
level so that you prevent over stocking of items*
2. Just in time - a major technique developed by
manufacturers to take advantage of inventory management
opportunities.
o Kung kailan lang kailangan, ‘dun lang oorder*
o A Japanese inventory management method in which
the goods are received from the suppliers only as
needed. You keep as little inventory on hand as
possible, that means you don’t stock-pile products
and raw materials just in case you need them. You
simply just reorder the products to replaced those
you have already sold or used*

Financial Control Inventory

- A specialty management science called operations research has

developed several techniques and formulas for managing
inventory because supplies are the second largest cost incurred by
the laboratory. Much intention has been given in monitoring and
controlling supply expenses*

The techniques/ formulas are the following:

1. EOQ (Economic Order Quantity) - which answers the
question of how much to order at one time (perpetual
system)
o This is the ideal order quantity a company should
purchase to minimize inventory cost*
2. EOP (End of Period Inventory) - also referred to as the
reorder point.
o Mainly used in a periodic system. This provides the
base or safety level for reordering inventory*
3. ROT (Retention of Title) - this allows you to retain
ownership of goods you sell until in a condition of the
contract is fulfilled.
o Helps to establish the best times to order to take
advantage of EOQ and EOP*
o Usually the condition here is the payment, and that
condition gives you security over the goods and
therefore, will prioritize you over the others. If you are
already paid, you will be given priority in those supplies
that you ordered*

In order to determine the EOQ, EOP, and ROT:

A. Annual usage – mainly dependent on the workload of the

laboratory
B. Average daily usage – this information can be obtained by
dividing the amount of supplies ordered in a year by 365
days. Let’s just say in a year, you have ordered 1,000 boxes of

Page 4 of 4