Consignment inventory: 5 common conflicts between vendors and providers

Consignment inventory management is a common cause of disputes. Today I’m looking at 5 common consignment conflicts between vendors and providers – and how to solve them.

If you’re spending way too long investigating data disagreements, then it’s time to break free from a cycle of poor hospital supply chain processes. Now is the time to use technology to add trust and transparency to vendor managed inventory (VMI).

5 common sources of consignment disputes

Consignment management often involves time-consuming liaison between vendors and healthcare facilities, as they endeavor to reconcile their consignment inventory issues and come to agreement on stock levels, procurement and billing.

Let’s take a look at 5 common challenges that regularly trigger trouble between supply chain partners.

1. Inefficiencies of manual consignment inventory management

Vendors often struggle to maintain accurate records of inventory stored on hospital sites. This vendor managed inventory (VIM) is often manually managed, and prone to counting errors and delayed updates.

Manual processes can leave all parties unclear on actual inventory levels, fueling misunderstandings on which stock items are actually available or require restocking. Manual implant tracking is an outdated, labor-intensive method for monitoring and managing consignment inventory and the lack of accurate, real-time data is a common cause of disputes.

With limited inventory visibility and off-site management by vendors, it’s hard to gain real-time data and ensure timely restocks of all items, so that the staff have the right products available upon demand.

 

2. Addressing data discrepancies for consignment inventory

Vendors and hospitals often work with separate inventory management systems – sometimes automated systems, other times just spreadsheets. These different inventory tracking methods often lead to two sets of disparate data, making it challenging to reach agreement on the current situation and the action required. For example, if there is no clarity on stock levels, then it is difficult to agree restock requirements.

When fundamental data can’t be relied up, the delay to decision making on vital operational activities can lead to billing disputes and disagreements but can also affect the availability of inventory and the delivery of high-quality patient care.

Providers and vendors are increasingly turning to automated inventory management technology to support a more unified way of working.

 

3. Expiry management of consignment stock

Consignment chain of custody agreements provide clarity on the transfer of custody of consignment inventory from one party to the other. It covers legal and regulatory accountability and liability.

In terms of expiry management, a typical agreement gives vendors responsibility for managing consignment inventory levels and replenishment, and overseeing stock control, as well as expiry and recall management.

Vendors must ensure that consignment stock is regularly rotated to prevent items from expiring on the shelves in order to prevent unnecessary wastage costs. Even more crucial, is the issue of expired products being left on the shelves, which can damage the vendor’s reputation and present a patient safety risk.

Ultimately, the hospital needs to trust that the consigned products provided are safe to use and don’t expose them to risk of accidental usage.

The hospital needs to ensure it meets it regulatory compliance criteria, and as consignment inventory only becomes the responsibility of the hospital at the point of use, it is best practice to put procedures in place to ensure every item is safety-checked before usage, rather than relying on the vendor’s scrutiny alone.

 

4. Liability for loss or damage:

Liability for loss or damage is a critical aspect of managing consignment stock and can often lead to conflicts between providers and vendors. Disputes may arise over whether the loss occurred during transportation, storage, or handling. Additionally, issues such as inadequate packaging, improper handling procedures or unsecure storage facilities can further complicate liability assessments.

Establishing clear accountability, agreeing risk management strategies, and taking steps to mitigate risks is important in preventing these conflicts.

When automated implant tracking systems are used, the added security and efficiency provide greater clarity on this issue.

 

5. The cost of data reconciliation and dispute resolution with vendor managed inventory

Reconciling conflicting vendor and provider consignment data can be a resource and time-intensive process. The inventory counts, documentation reviews, plus faxes, emails and calls between both parties may ultimately lead to agreement on the data but it diverts resources from other key tasks and can put a strain on working relationships.

Inefficient consignment inventory systems certainly carry a cost.

For a system to run smoothly there needs to be real time visibility, accurate data and shared vision. Without these three key elements both parties are set up to fail.

 

We can see that the management of consignment inventory presents numerous challenges and complexities for both vendors and providers. Looking at these five common causes of consignment conflicts demonstrates the need to have strong protocols and systems in place.

The best and most common solution to consignment conflicts is to use a single, automated implant tracking system, which provides access to all parties.

 

Consignment management solution

Automated smart cabinet technology is providing a central source of data for providers and vendors. RFID tracking with cloud management software enables multiple parties to access the same core data, ensuring everyone has shared and accurate vision of consignment inventory.

An RFID smart cabinet automatically tracks consignment stock, and the managing software is able to provide real-time metrics, reports and analytics. This vital data ensures everyone is clear on stock levels and usage and can use data insights for smarter planning and management.

 

RFID Cabinets improve the efficiency of medical implant tracking
RFID Cabinets improve the efficiency of medical implant tracking

 

TotalSense RFID smart cabinet solution for consignment management

IDENTI’s TotalSense RFID smart cabinet is often used by customers as a consignment management system.

It provides automated tracking and real-time visibility for ALL supply chain partners – ensuring everyone is in complete agreement on inventory data. Full visibility and a shared understanding of stock levels leads to timely restocks. Automated expiry management reduces expiry wastage to zero and ensures all items are safety-checked.

TotalSense provides the real-time data and shared inventory vision that makes vendor managed inventory simple to oversee.

Once all parties share a common understanding this enhances performance, supports data-driven decision making and makes contract monitoring simple.

With a central resource providing clear, accurate data to all parties, finally trust and transparency are achieved, putting an end to disputes.

Contact me if you want more information on a stress-free consignment management system, that puts all parties are on the same page.

 

 

Automated, Weight Based PAR Bin

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FAQ: Consignment inventory: 5 common conflicts between vendors and providers

Consignment inventory involves suppliers stocking their products at the healthcare provider’s location, and payment is only made for items when they are used.

This pay-per-use system arrangement allows healthcare providers to minimize their medical inventory holding costs and optimize cash flow, as the vendor retains ownership of the inventory until they are used.

Vendor managed inventory (VMI) helps hospitals to better manage their cash flow, while reducing their responsibilities and costs.

Despite the advantages of incorporating consignment arrangements into the management of high-value implants and medical devices, consignment inventory poses several challenges.

One of the primary difficulties is ensuring accurate inventory tracking and reconciliation between the supplier and the customer. Discrepancies in inventory records can lead to disputes over stock levels, usage, and billing.

Additionally, managing implant expiration dates of consigned products requires diligent oversight to prevent waste and ensure product quality and safety. Furthermore, disputes over liability for loss or damage to consignment stock can strain relationships between suppliers and customers if not addressed promptly and effectively.

Medical device and implant tracking ensures the traceability of specialist inventory, enhancing patient safety, regulatory compliance, and inventory accuracy.

Firstly, implant tracking ensures the traceability of medical devices used in patient procedures. By accurately documenting implant usage, hospitals can quickly identify and trace specific devices in case of recalls, adverse events, or quality control issues. This traceability is crucial for mitigating risks associated with defective or malfunctioning implants, thereby enhancing patient safety, and reducing the potential for medical errors.

Secondly, implant tracking is essential for regulatory compliance. Healthcare regulatory bodies, such as the FDA (Food and Drug Administration) in the United States and similar agencies globally, often require hospitals to maintain detailed records of medical devices, including implants. Unique Device Identifier (UDI) Compliance with these regulations ensures that hospitals adhere to industry standards and legal requirements, minimizing the risk of fines, penalties, or legal liabilities. Implant tracking systems help hospitals demonstrate accountability and transparency in their procurement, usage, and disposal of medical devices, thus facilitating regulatory audits and inspections.

Furthermore, implant tracking contributes to improved inventory accuracy and management within hospitals. By maintaining real-time records of implant usage, hospitals can optimize inventory levels, reduce excess stock, and minimize wastage. This not only helps hospitals control costs but also ensures the availability of implants when needed for patient procedures.

Additionally, implant tracking systems can integrate with hospital inventory management software, enabling automated replenishment, stock forecasting, and efficient supply chain management. As a result, hospitals can streamline their operations, enhance efficiency, and allocate resources more effectively to meet patient needs.

Implant tracking is indispensable for hospitals as it ensures the traceability of medical devices, enhances patient safety, facilitates regulatory compliance, and optimizes inventory management. By implementing robust implant tracking systems and processes, hospitals can safeguard patient health, mitigate risks, and improve operational efficiency in their healthcare delivery.

Implementing an implant tracking system in a hospital setting poses several challenges that healthcare institutions must address to ensure successful adoption and utilization.

When dealing with consignment inventory, the most important factor is the ability to collect and share real-time, accurate inventory data between supply chain partners. For purchased inventory, the hospital has full responsibility for the item upon receipt.

Whether the implant tracking system is for purchased stock or consignment inventory, the technology being used needs to deliver an effective solution for the responsible party. Here are a few challenges relating to implementing a new implant tracking solution in healthcare facilities.

The seamless integration of implant tracking technology with existing hospital systems is crucial for effective inventory management. Hospitals typically have complex IT infrastructures with multiple software applications for patient management, inventory control, and electronic health records (EHR) eg. popular systems such as Cerner or EPIC. Ensuring compatibility and interoperability between the implant tracking system and these existing systems is crucial to avoid data silos and streamline workflow processes.

Another challenge is ensuring the accuracy and reliability of data captured by the implant tracking system. Inaccurate or incomplete data can compromise patient safety and undermine the effectiveness of inventory management efforts. Hospitals must establish robust data capture mechanisms, identify effective technology for data collection, ensure staff are adequately trained, implement quality assurance protocols are implemented.

By proactively addressing these important issues and adopting best practices in system implementation and management, hospitals can maximize the benefits of implant tracking technology and enhance patient care delivery.

Hospitals can employ a variety of strategies to effectively minimize both stockouts and overstock situations, optimizing their inventory management processes and ensuring the availability of essential supplies when needed. Implementing robust inventory control measures is paramount, involving the establishment of clear protocols for ordering, receiving, storing, and dispensing inventory items. This includes the effective management of both purchased stock and vendor managed inventory.

Utilizing real-time tracking systems is a key approach to minimizing stockouts and overstock situations. Advanced inventory management software and tracking technologies enable hospitals to monitor inventory levels and movements in real-time, providing accurate and up-to-date visibility into stock availability across various locations and departments. Automated alerts and notifications can alert inventory managers to low stock levels or impending stockouts, enabling prompt action to reorder supplies or adjust inventory levels accordingly. Additionally, real-time tracking systems identify slow-moving or obsolete items, allowing hospitals to adjust their procurement patterns, minimize overstock situations and optimize inventory turnover rates. The result is a demand-driven, balanced inventory,

Analyzing implant usage patterns and demand trends is essential for hospitals to proactively manage their inventory and anticipate future supply needs effectively.

Tracking implant usage plays a pivotal role in inventory control within hospitals, offering crucial insights into consumption patterns, demand trends, and supply needs. By meticulously monitoring the usage of implants, hospitals can proactively manage their inventory, ensuring that adequate stock levels are maintained to meet patient care demands while minimizing excess inventory and associated costs.

Analyzing historical consumption data allows hospitals to identify patterns and trends in implant usage, enabling them to anticipate future supply needs accurately. For example, by examining seasonal variations and patient census trends, hospitals can forecast fluctuations in demand for specific implants, adjusting inventory levels accordingly to prevent stockouts or overstock situations.

The effective tracking of implant utilization at the point of care facilitates precise demand forecasts and inventory replenishment schedules. By leveraging data analytics techniques, such as predictive analytics and forecasting algorithms, hospitals can get a better feel for future demand for implants based on historical consumption patterns and other relevant factors. This enables hospitals to optimize their inventory levels and ordering quantities, ensuring that sufficient stock is available when needed, while minimizing excess inventory holding costs and the risk of obsolescence.

Implementing Radio Frequency Identification (RFID) technology in hospital inventory management offers a multitude of benefits that can revolutionize the efficiency and accuracy of inventory control processes.

One of the primary advantages of RFID technology is its ability to enable real-time tracking of inventory items throughout the hospital premises, unlike traditional barcode systems that require line-of-sight scanning,

RFID tags emit radio signals that can be read remotely and simultaneously, allowing for continuous and automated tracking of inventory movements. This real-time visibility into inventory locations and status enables hospitals to monitor stock levels, track item usage, and identify potential issues such as stockouts or expired products promptly.

RFID technology is often considered to be cabinet technology, but mobile RFID systems are now available via cloud-based apps, ensuring implants stored on the shelves, and not in cabinets, can also be tracked using RFID tags and mobile app technology. RFID can create a virtual smart cabinet – ensuring item level management of all high-value stock. This system works well for purchased stock or consignment inventory.

Implant data plays a crucial role in hospital inventory management by providing valuable insights and actionable intelligence that can drive more informed and efficient decision-making processes.

One of the primary functions of data analytics in inventory management is analyzing usage patterns and trends. By analyzing historical consumption data and tracking patterns of inventory utilization, hospitals can gain a deeper understanding of their inventory needs and preferences. This enables them to identify high-demand items, seasonal variations, and trends in patient care practices, allowing for more accurate forecasting of future demand and inventory requirements.

Data analytics enable hospitals to optimize inventory levels and replenishment strategies based on real-time insights and predictive analytics. By continuously monitoring inventory levels, usage rates, and lead times, hospitals can identify opportunities to streamline inventory management processes, reduce carrying costs, and improve inventory turnover rates. This ensures that hospitals maintain adequate stock levels while minimizing excess inventory and waste, ultimately improving operational efficiency and reducing costs.

Additionally, data analytics empowers hospitals to make data-driven decisions and strategic investments in inventory management initiatives. By analyzing key performance indicators (KPIs) and metrics such as inventory turnover, fill rates, and stockout rates, hospitals can assess the effectiveness of their inventory management practices and identify areas for improvement. This enables hospitals to prioritize resources, allocate budgets, and implement targeted interventions that address specific challenges and opportunities in inventory management.

Implant tracking systems with advanced managing software can produce meaningful data analytics that help hospitals to make data-driven decisions that improve operational efficiency and healthcare delivery.

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About the author

Or is the Head of Marketing and Strategic Partnerships. She has a wealth of experience in the health–tech sector. Her innovative marketing strategies have successfully driven IDENTI’s growth in multiple worldwide markets. Her strength is the ability to identify what truly resonates within the industry. She is passionate about building relationships and her expertise lies in creating meaningful partnerships with healthcare providers, distributors, and suppliers..

Consignment inventory involves suppliers stocking their products at the healthcare provider’s location, and payment is only made for items when they are used.

This pay-per-use system arrangement allows healthcare providers to minimize their medical inventory holding costs and optimize cash flow, as the vendor retains ownership of the inventory until they are used.

Vendor managed inventory (VMI) helps hospitals to better manage their cash flow, while reducing their responsibilities and costs.

Despite the advantages of incorporating consignment arrangements into the management of high-value implants and medical devices, consignment inventory poses several challenges.

One of the primary difficulties is ensuring accurate inventory tracking and reconciliation between the supplier and the customer. Discrepancies in inventory records can lead to disputes over stock levels, usage, and billing.

Additionally, managing implant expiration dates of consigned products requires diligent oversight to prevent waste and ensure product quality and safety. Furthermore, disputes over liability for loss or damage to consignment stock can strain relationships between suppliers and customers if not addressed promptly and effectively.

Medical device and implant tracking ensures the traceability of specialist inventory, enhancing patient safety, regulatory compliance, and inventory accuracy.

Firstly, implant tracking ensures the traceability of medical devices used in patient procedures. By accurately documenting implant usage, hospitals can quickly identify and trace specific devices in case of recalls, adverse events, or quality control issues. This traceability is crucial for mitigating risks associated with defective or malfunctioning implants, thereby enhancing patient safety, and reducing the potential for medical errors.

Secondly, implant tracking is essential for regulatory compliance. Healthcare regulatory bodies, such as the FDA (Food and Drug Administration) in the United States and similar agencies globally, often require hospitals to maintain detailed records of medical devices, including implants. Unique Device Identifier (UDI) Compliance with these regulations ensures that hospitals adhere to industry standards and legal requirements, minimizing the risk of fines, penalties, or legal liabilities. Implant tracking systems help hospitals demonstrate accountability and transparency in their procurement, usage, and disposal of medical devices, thus facilitating regulatory audits and inspections.

Furthermore, implant tracking contributes to improved inventory accuracy and management within hospitals. By maintaining real-time records of implant usage, hospitals can optimize inventory levels, reduce excess stock, and minimize wastage. This not only helps hospitals control costs but also ensures the availability of implants when needed for patient procedures.

Additionally, implant tracking systems can integrate with hospital inventory management software, enabling automated replenishment, stock forecasting, and efficient supply chain management. As a result, hospitals can streamline their operations, enhance efficiency, and allocate resources more effectively to meet patient needs.

Implant tracking is indispensable for hospitals as it ensures the traceability of medical devices, enhances patient safety, facilitates regulatory compliance, and optimizes inventory management. By implementing robust implant tracking systems and processes, hospitals can safeguard patient health, mitigate risks, and improve operational efficiency in their healthcare delivery.

Implementing an implant tracking system in a hospital setting poses several challenges that healthcare institutions must address to ensure successful adoption and utilization.

When dealing with consignment inventory, the most important factor is the ability to collect and share real-time, accurate inventory data between supply chain partners. For purchased inventory, the hospital has full responsibility for the item upon receipt.

Whether the implant tracking system is for purchased stock or consignment inventory, the technology being used needs to deliver an effective solution for the responsible party. Here are a few challenges relating to implementing a new implant tracking solution in healthcare facilities.

The seamless integration of implant tracking technology with existing hospital systems is crucial for effective inventory management. Hospitals typically have complex IT infrastructures with multiple software applications for patient management, inventory control, and electronic health records (EHR) eg. popular systems such as Cerner or EPIC. Ensuring compatibility and interoperability between the implant tracking system and these existing systems is crucial to avoid data silos and streamline workflow processes.

Another challenge is ensuring the accuracy and reliability of data captured by the implant tracking system. Inaccurate or incomplete data can compromise patient safety and undermine the effectiveness of inventory management efforts. Hospitals must establish robust data capture mechanisms, identify effective technology for data collection, ensure staff are adequately trained, implement quality assurance protocols are implemented.

By proactively addressing these important issues and adopting best practices in system implementation and management, hospitals can maximize the benefits of implant tracking technology and enhance patient care delivery.

Hospitals can employ a variety of strategies to effectively minimize both stockouts and overstock situations, optimizing their inventory management processes and ensuring the availability of essential supplies when needed. Implementing robust inventory control measures is paramount, involving the establishment of clear protocols for ordering, receiving, storing, and dispensing inventory items. This includes the effective management of both purchased stock and vendor managed inventory.

Utilizing real-time tracking systems is a key approach to minimizing stockouts and overstock situations. Advanced inventory management software and tracking technologies enable hospitals to monitor inventory levels and movements in real-time, providing accurate and up-to-date visibility into stock availability across various locations and departments. Automated alerts and notifications can alert inventory managers to low stock levels or impending stockouts, enabling prompt action to reorder supplies or adjust inventory levels accordingly. Additionally, real-time tracking systems identify slow-moving or obsolete items, allowing hospitals to adjust their procurement patterns, minimize overstock situations and optimize inventory turnover rates. The result is a demand-driven, balanced inventory,

Analyzing implant usage patterns and demand trends is essential for hospitals to proactively manage their inventory and anticipate future supply needs effectively.

Tracking implant usage plays a pivotal role in inventory control within hospitals, offering crucial insights into consumption patterns, demand trends, and supply needs. By meticulously monitoring the usage of implants, hospitals can proactively manage their inventory, ensuring that adequate stock levels are maintained to meet patient care demands while minimizing excess inventory and associated costs.

Analyzing historical consumption data allows hospitals to identify patterns and trends in implant usage, enabling them to anticipate future supply needs accurately. For example, by examining seasonal variations and patient census trends, hospitals can forecast fluctuations in demand for specific implants, adjusting inventory levels accordingly to prevent stockouts or overstock situations.

The effective tracking of implant utilization at the point of care facilitates precise demand forecasts and inventory replenishment schedules. By leveraging data analytics techniques, such as predictive analytics and forecasting algorithms, hospitals can get a better feel for future demand for implants based on historical consumption patterns and other relevant factors. This enables hospitals to optimize their inventory levels and ordering quantities, ensuring that sufficient stock is available when needed, while minimizing excess inventory holding costs and the risk of obsolescence.

Implementing Radio Frequency Identification (RFID) technology in hospital inventory management offers a multitude of benefits that can revolutionize the efficiency and accuracy of inventory control processes.

One of the primary advantages of RFID technology is its ability to enable real-time tracking of inventory items throughout the hospital premises, unlike traditional barcode systems that require line-of-sight scanning,

RFID tags emit radio signals that can be read remotely and simultaneously, allowing for continuous and automated tracking of inventory movements. This real-time visibility into inventory locations and status enables hospitals to monitor stock levels, track item usage, and identify potential issues such as stockouts or expired products promptly.

RFID technology is often considered to be cabinet technology, but mobile RFID systems are now available via cloud-based apps, ensuring implants stored on the shelves, and not in cabinets, can also be tracked using RFID tags and mobile app technology. RFID can create a virtual smart cabinet – ensuring item level management of all high-value stock. This system works well for purchased stock or consignment inventory.

Implant data plays a crucial role in hospital inventory management by providing valuable insights and actionable intelligence that can drive more informed and efficient decision-making processes.

One of the primary functions of data analytics in inventory management is analyzing usage patterns and trends. By analyzing historical consumption data and tracking patterns of inventory utilization, hospitals can gain a deeper understanding of their inventory needs and preferences. This enables them to identify high-demand items, seasonal variations, and trends in patient care practices, allowing for more accurate forecasting of future demand and inventory requirements.

Data analytics enable hospitals to optimize inventory levels and replenishment strategies based on real-time insights and predictive analytics. By continuously monitoring inventory levels, usage rates, and lead times, hospitals can identify opportunities to streamline inventory management processes, reduce carrying costs, and improve inventory turnover rates. This ensures that hospitals maintain adequate stock levels while minimizing excess inventory and waste, ultimately improving operational efficiency and reducing costs.

Additionally, data analytics empowers hospitals to make data-driven decisions and strategic investments in inventory management initiatives. By analyzing key performance indicators (KPIs) and metrics such as inventory turnover, fill rates, and stockout rates, hospitals can assess the effectiveness of their inventory management practices and identify areas for improvement. This enables hospitals to prioritize resources, allocate budgets, and implement targeted interventions that address specific challenges and opportunities in inventory management.

Implant tracking systems with advanced managing software can produce meaningful data analytics that help hospitals to make data-driven decisions that improve operational efficiency and healthcare delivery.