How is Information from ABC-VED-FNS Matrix Analysis Used to Improve Operational Efficiency of Pharmaceuticals Inventory Management? A Cross-Sectional Case Analysis.

Abstract

PurposeThe categorization of inventories using various techniques optimizes the efficiency of warehouse operations. The ABC (always, better, and control); VED (vital, essential, and desirable); and FNS (fast-, normal-, and slow-moving) analyses provide items according to cost significance, criticality value, and consumption rate respectively. Thus, this study aimed to identify the categories of items requiring focused managerial control, priority, and replenishment intervals, as well as to evaluate whether the ABC–VED–FNS matrix is fit for effective and efficient inventory control of the Ethiopian Pharmaceutical Supply Agency (EPSA).MethodsAn institution-based cross-sectional descriptive study was conducted on 393 pharmaceuticals distributed by the EPSA-Jimma hub. The annual sales list with respective total quantity and unit price was collated from the logistics data records to perform the ABC analysis. The VED data were generated from the agency’s pharmaceutical procurement list. To perform FNS analysis, we take into account the number of issue transactions as well as the average monthly consumption pattern for each item. Microsoft office Excel 2013 statistical functions were used to analyse the collated data.ResultsThe ABC-VED analysis revealed that 187 (47.58%) of category I items account for 90% annual sales value; of which the highest proportion (63%) was AV items (36, 9%). Remarkably, there was no desirable (D) commodity that belongs to Class A. From the ABC–VED–FNS matrix analysis, category I consisted of 12 combinations with 187 (47.6%) items. Moreover, 28 (7.13%) items (CDN = 4 and CDS = 24) constituted category-III.Conclusion and RecommendationThe ABC–VED–FNS matrix analysis can help organization implement inventory control policies and techniques, narrow down a group of items that require more managerial monitoring and control, prioritize a storage location (pick-face) plan, minimize the time and labor cost of put-away, picking, and packing, and dictate when products should be reordered or replenished.