What’s inside:
This guide breaks down the leading causes of supply chain waste in U.S. hospitals and the materials management strategies proven to reduce it.
Learn how high-value implants, expired products, inefficient purchasing, and manual workflows contribute to unnecessary costs, and how modern AI-powered inventory systems help hospitals improve visibility, reduce waste, and strengthen operational efficiency.
Waste reduction is a key element of many healthcare efficiency initiatives, but what exactly does it involve?
In many hospitals, materials management plays a central role in tackling waste. Medical inventory often goes to waste due to unused, misplaced, stolen, or expired supplies. That’s why hospitals are focusing on gaining greater visibility and control over their inventory to reduce unnecessary costs and improve patient care.
Let’s explore the main hospital materials management strategies that healthcare facilities are using to cut waste and boost operational efficiency.
How Inventory Tracking and Expiration Control Reduce Medical Supply Waste
Managing High-Value Medical Devices and Implants
High-value medical devices, especially implants, represent some of the most costly items in the hospital supply chain. Mismanagement of these items results in two major losses:
- The cost of the wasted item
- The cost of replacing it
A proven solution is implementing real-time, item-level tracking using automated hospital materials management systems. Smart technologies such as TotalSense UHF RFID Smart Cabinets and mobile hand scanners help prevent loss, misplacement, and overstocking—reducing waste and strengthening financial stewardship.
Expiration Date Management: FIFO in Hospital Materials Management
The US healthcare system contributes to an estimated $765 billion in overall U.S. healthcare system waste annually, including expired and unused medical supplies. Modern materials management systems now integrate FIFO (First-In-First-Out) support, ensuring items closest to expiration are used first. Digital visibility prevents supplies from expiring on the shelf, a major contributor to preventable medical waste.
Smarter Purchasing & Stock Optimization to Minimize Waste
Using Just-in-Time (JIT) Inventory Management Carefully and Strategically
The Just-in-Time model reduces waste by ordering supplies only as needed. While this minimizes on-site inventory and expired items, it introduces supply chain vulnerability if used too broadly.
Hospitals are increasingly coupling JIT with:
- Predictive analytics
- Safety stock automation
- Smart replenishment alerts
This combination allows hospitals to reduce waste without risking stockouts during supply chain disruptions.
Standardization Strategies to Reduce Overstocking
A lack of product standardization can lead to overstocking, obsolete items, and high expiry waste. There are a few reasons why this happens. For example, hospitals sometimes use multiple suppliers for the same or similar products to boost supply chain resilience. Still, there’s a need to balance the benefits of resilience against the cost savings that come from concentrating purchasing with fewer vendors whenever possible.
Hospital materials management strategies also aim to reduce variation driven by physician preference. By standardizing products, hospitals simplify purchasing, reduce complexity, and lower both waste and costs. Access to real-time data on stock levels and usage patterns further supports these standardization efforts, making it easier for hospitals to make informed supply chain decisions.
Value Analysis Committees: Data-Driven Purchasing Decisions
Value analysis committees evaluate products based on safety, performance, cost, and outcomes. As part of value-based care initiatives, this process ensures hospitals purchase high-value, cost-effective supplies while eliminating wasteful or redundant options.
Accurate usage data from materials management systems strengthens these decisions, making the process more evidence-driven and effective.
Alternative Inventory Models and Their Waste Impacts
Consignment and Bill-Only Models: Risks and Opportunities
Alternative purchasing models, like consignment and bill-only, help shift inventory risk from hospitals to suppliers. For consignment items, the supplier retains ownership of the product until it is actually used. Bill-only items are delivered directly to the operating room, and the hospitals typically pay only for items documented as used. These systems rely on tight procedural oversight and dependable point-of-use systems to track and document product usage.
While the vendor retains ownership until the point of use, hospitals may still be held accountable for losses or expiration if tracking systems are inadequate. Sharing real-time inventory data between hospitals and vendors is essential to make these models work effectively, helping reduce disputes and further minimize waste.
Operational Efficiency & Bulk Supply Waste Reduction
Kanban and PAR Systems for Hospital Bulk Inventory
Bulk supplies are often overlooked as a significant source of waste. Automated Kanban and PAR systems improve hospital materials management by aligning purchasing with actual demand, resulting in reduced expiration and overstock waste. IDENTI’s 2-bin Kanban system uses visual cues to trigger replenishment when bins are empty, while PAR-level systems, like the Wireless PAR Weighting Bin, reorder supplies once stock falls below a predefined threshold.
Labor Waste: Manual Processes, Burnout, and How Automation Helps
Beyond physical product waste, hospitals can lose significant resources through inefficient inventory processes. Wasted labor costs occur when nurses and logistics staff spend time manually updating stock counts or locating supplies, taking time away from patient care.
AORN recommends automating these tasks to help reduce human error, lower HR costs, and boost staff satisfaction by allowing clinical staff to focus more on patient care.
Harnessing Technology for Modern Hospital Materials Management
All these strategies can be strengthened with a single step: adopting automated hospital materials management systems. IDENTI’s AI-powered solutions and comprehensive platform can be custom-designed to track high-value items at the inventory level, digitally manage bulk supplies, and boost point-of-use consumption tracking.
By leveraging smart hardware and advanced AI software, hospitals can effectively cut inventory waste, reduce costs, and enhance care delivery.
Contact us to learn how IDENTI’s solutions can support your hospital’s material management strategy and help reduce waste.
