Just in Time Inventory Management in Healthcare: FAQ

Just in time inventory management is a strategy where healthcare facilities keep just enough stock on hand to meet patient needs, and reorder based on usage. It’s a lean system designed to reduce waste and control costs.

Research shows that medications and supplies account for 22% of the average hospital’s expenses — even higher for facilities providing specialized services. The just in time (JIT) approach to optimizing supply management has been used in general business for decades. Now that it has arrived in the healthcare sector, it’s a growing trend that has proven effective — saving facilities anywhere from 3 to 11 million dollars per year.

This guide will give you an overview of the JIT philosophy, with helpful examples that showcase how it can be safely implemented in healthcare settings. We’ll answer the most common questions about the system, discuss its pros and cons, and provide alternatives. Though implementing just in time principles can lead to cost savings, it must be used in a way that mitigates the risk of supply shortages and disruptions in patient care.

Just in Time (JIT) Inventory Management

The “just in time” system was developed in Japan within the Toyota Motor Corporation as a method for quick adaptation to changing customer preferences and industry changes. The concept centers around keeping minimal supplies on hand and replenishing only when necessary.

In general business settings this could be when an order is placed. In healthcare, replenishment of supplies often occurs when a minimum value is reached that indicates more stock is needed. This ensures that there is at least some stock available to meet patient needs as they arise.

Using JIT Inventory Management in Healthcare: FAQ

Healthcare facilities must order, track, store, dispense, and reorder supplies on a regular basis. This takes a significant amount of coordinated labor and storage space. The JIT approach is one way to handle inventory management. Here are common questions about implementing JIT in healthcare settings.

What is just in time inventory management?

Whether it’s batteries, IV fluids, catheters, or any other necessary item, every healthcare facility has a method for managing inventory. The JIT inventory system is based on keeping a minimal amount of medical supplies on the premises, and working closely with suppliers to restock on an as-needed basis. The inventory is monitored and orders are adjusted to match fluctuations in demand.

What are some just in time inventory management examples?

Rather than keeping a year’s worth of latex gloves in a central supply department, a hospital using a JIT system keeps a month’s worth in stock. When a predetermined minimum amount of gloves remains, this triggers the next order. JIT inventory management software would typically be used to automate tracking and reordering workflows.

As another example, consider medication inventory management. Within a JIT system, medications are monitored and replaced as needed. Stockpiling medications is avoided. Developing categories can help to ensure life-saving medications are given high priority and restocked appropriately, even if challenges in the supply chain arise. Using the JIT approach with medications can prevent the waste that occurs when overstocked medications expire.

How does the JIT approach improve facility operations?

When implemented correctly, the approach can help healthcare facilities:

• Maximize physical space usage by reducing storage needs.
• Adapt to industry changes and evolving best-practices.
• Reduce waste.
• Keep supply costs low.

What are some downsides to JIT inventory delivery?

When healthcare facilities rely on “just in time” deliveries, unforeseen problems within the supply chain can lead to delays and shortages. In addition, healthcare facilities may face shortages if there’s a sudden surge in patient demands, such as in the case of a public health emergency.

What technology is typically involved when using a JIT approach in healthcare?

The availability of certain medical supplies can quickly become crucial to patient wellbeing. To make JIT safe, hospitals rely on technology to provide real-time data about the supplies they have on hand, as well as to automatically order more.

The combination of technology that’s used to oversee the process may include:

• Barcodes and/or radio frequency identification (RFID) tags to automatically track supplies.
• JIT inventory management software.
• Smart shelving that automatically detects inventory levels (for example, shelves enabled with weight sensors or cameras).
• Predictive analytics and AI-driven software to detect upcoming patient demands.

What’s the difference between economic order quantity (EOQ) and JIT?

JIT is considered a lean inventory management strategy. On the opposite end of the spectrum is the economic order quantity (EOQ) strategy, which involves finding an ideal balance between storage costs and ordering costs. By ordering large batches of supplies relatively infrequently, a hospital may be able to minimize the expenses associated with ordering.

Here’s a closer look at the differences between JIT vs EOQ:

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