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Efficiency of Inventory in Thai Hospitals: Comparing Traditional and Vendor-Managed Inventory Systems

Author

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  • Sarunya Adirektawon

    (Faculty of Pharmaceutical Sciences, Chulalongkorn University, 254 Phayathai Road, Pathumwan, Bangkok 10330, Thailand)

  • Anuchai Theeraroungchaisri

    (Faculty of Pharmaceutical Sciences, Chulalongkorn University, 254 Phayathai Road, Pathumwan, Bangkok 10330, Thailand)

  • Rungpetch C. Sakulbumrungsil

    (Faculty of Pharmaceutical Sciences, Chulalongkorn University, 254 Phayathai Road, Pathumwan, Bangkok 10330, Thailand)

Abstract

Background : Traditional procurement and price negotiation methods in public hospitals in Thailand involve group purchasing agreements and bulk orders, posing challenges to improving inventory management efficiency. The vendor-managed inventory (VMI) model is a promising alternative for enhancing hospital performance, especially during crises. This study aimed to assess the potential cost savings in implementing VMI in a large general hospital in Thailand. Methods : A simulation modeling approach was used to compare the current inventory system with three VMI models: VMI1, focused on improving inventory turnover rate (ITR); VMI2, emphasized frequent replenishment with a 1-month supply; and VMI3, eliminated safety stock. Results : The results demonstrated significant cost savings, with potential reductions in total inventory management expenses. Specifically, VMI1 improved ITR from 6.31 to 7.76, reducing average inventory by 36% and cutting management costs by 40%. VMI2, with an ITR of 12.80, reduced inventory by 44% and saved 47% in management costs, while VMI3 achieved a 70% reduction in inventory and a 69% saving in management costs. Conclusions : This study highlights the VMI’s transformative potential in hospital inventory management, demonstrating significant cost savings. However, in the public sector, the feasibility of procurement regulations requires further exploration.

Suggested Citation

  • Sarunya Adirektawon & Anuchai Theeraroungchaisri & Rungpetch C. Sakulbumrungsil, 2024. "Efficiency of Inventory in Thai Hospitals: Comparing Traditional and Vendor-Managed Inventory Systems," Logistics, MDPI, vol. 8(3), pages 1-11, September.
    • Handle: RePEc:gam:jlogis:v:8:y:2024:i:3:p:89-:d:1474747
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    References listed on IDEAS

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