Pharmaceutical inventory management based on ABC-VEN analysis: case study of Rwanda Medical Supply LTD (RMS LTD), Nyamagabe branch

Abstract

Background Inventory control of health commodities must be handled carefully to ensure an uninterrupted health supply chain and minimize wastage in the given institutions, especially in health facilities. Therefore, this study was proposed to analyze health commodities expenditure and identify products that require close follow-up in health facilities. The study assessed inventory control of the products managed at the District warehouse and distributed to the district-based health facilities. Methodology We conducted this study at Rwanda Medical Supply Ltd, Nyamagabe Branch, for products distributed in the health facilities of the Nyamagabe District catchment area for three years, from the financial year 2017-2018 to 2019-2020. First, we considered distribution data for essential generic medicines invoiced to the health facilities for the ABC analysis. Then, VEN analysis was performed to identify vital products with a high value requiring more attention. Then, products were arranged according to the descending order of importance, and we performed a breakdown of products according to the Paleto Principle. Results In the ABC-VEN analysis for the total number of 457 essential generic medicines, 76 products, representing 19.84% of all products, had 74.91% of the total cost of all products. These products were classified in Group A. In Group B, 116 products correspond to 30.29% of all products with 20% of the total cost, while in Group C, 191 products represent 49.87% of all products with a total cost of only 5.09%. In VEN analysis, 202 products representing 44.20 % were classified as vital products, 231 were classified as essential medicines and represented 50.54 %, while 24 products representing 75.26 % were classified as non-essential. Vital products represent 38.20% of the total cost, essential products 59.17%, and non-essential products 2.63%. In ABC-VEN analysis, we found that Class I represents 55.80 % of all medicines that cost 87.88% of all total cost. Class II represents 40.70% of all medicines representing 11.82% of the total cost, and Class III represents 3.50 % of all commodities that account for 0.3% of all total cost. iv Conclusion Inventory management techniques are essential to analyze pharmaceutical expenditure and improve procurement planning and budgeting to optimize resource use. This study contributed to the categorization of medicines expenditure at RMS Ltd Nyamagabe Branch using ABC-VEN analysis. According to ABC-VEN analysis, it was recommended that health supply chain managers focus more on the supervision of products in category I. Hence, health facilities managers should adopt inventory techniques using ABC/VEN analysis for resources optimization.