You have recently been promoted to manage the inventory department for a small community hospital. You have been working there for the past two years since completing your Supply Chain program at the College. You have learned well, under the direction of the previous Stores Manager, a man who has recently retired after 35 years in the position.

Sherry St. Pierre, the Director of Materials Management, is your new manager. In your orientation meeting, she gave you some loosely defined objectives but challenged you to use your education and brief experience to "modernize" the inventory approaches.

"There haven't been many changes made for about twenty years," Sherry St. Pierre commented. "It's time for us to manage our inventory processes in better ways."

"We don't expect immediate miracles," she said reassuringly. "But we would like to start seeing concrete results fairly soon."

She went on to ask you to create plan of action for the coming year. The plan of action should include some specific objectives, with measurable goals.

"Can you provide me with a draft plan by the end of this month? It should outline your initial plan of attack and show your estimate of the improvements you think can be made and the reduction in costs that might achieve."

You are given two objectives to consider:

• Clean up the inventory. Are there products that can be disposed of and taken off the shelves?
• How can you manage the inventory in better ways? Make better use of your time, and eliminate stockouts as much as possible!

Your preliminary investigations have revealed that there are over 4,000 line items in the General Inventory. The annual expenditure for replenishment was a total of $8,642,178 at the previous year-end. Expenditures for the year-to-date are showing a similar pace.

You realize that "annual spend" can help isolate certain products that have outlived their usefulness. From your time working "at the shelves," you are aware that there are several repair and maintenance parts on the shelves that were kept for maintaining an in-ground irrigation system - a system that was decommissioned and removed five years ago. What would you recommend for such items? Are there any other flaws that you can identify or imagine?

You also know that there are many line items that are very active that deserve to be the top priority.

Questions:

Using information from your education at the College and the on-the-job experience that you have gained since joining the hospital, draft suggestions for some of the first steps you will take to review and optimize the inventory.

List two actions or activities that you could introduce quickly to begin streamlining the inventory to make it more manageable and more effective.

Describe these actions and explain to your director what their objectives are and how their outcomes will improve Inventory Management. Take into consideration that your director may or may not have a Supply Chain Management background to interpret the recommendations, so be clear in your explanation. Set a reasonable target outcome (for example, a 15% reduction of overall line items) and/or explain the rationale for the change.