EFFECTS OF INVENTORY MANAGEMENT PRACTICES ON

HEALTH CARE DELIVERY; A CASE STUDY OF ASHANTI

REGIONAL MEDICAL STORES

Declaration
I RITA OWUSU-DONKOR do hereby declare this work is the results of my own
research and has not been presented by anyone or group of persons for any academic
award in this or any other university. All references used in the work have been fully
acknowledged.
I bear sole responsibility for any short coming.

------------------------------------------

---------------------------

RITA OWUSU-DONKOR
PG 5761611

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---------------------------

MR. KWABENA OBIRI YEBOAH

SUPERVISOR

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MR. DAVID ASAMOAH

HEAD OF DEPARTMENT
LOGISTIC AND SUPPLY CHAIN

Dedication

This thesis is dedicated to my family i.e. Kwadwo and the Kids for the sacrifices they
made especially on Saturdays to see me through the programme.

Acknowledgements
Profound thanks to the God Almighty for the grace granted me through this program.
I also wish to thank my supervisor Mr. Kwabena Obiri-Yeboah for his immense help.
I appreciate also profoundly the support from my Boss Alhaji Kofi Baryeh, and from
Lovis Armah Odonkor who assisted with my data collection.

Abstract
According to the Wikipedia Encyclopedia, Inventory is basically used to describe the
goods and material that a business holds for the ultimate purpose of resale (or repairs).
Inventory management however is a science primarily about specifying the shape and
percentage of stocked goods. The scope of the inventory management concerns the
timelines between replenishment lead time, carrying cost, available physical space for
inventory, etc. The effect of inventory management practices on health care delivery is
the topic of this research. It was a six weeks study at the Ashanti Regional Medical stores.
The research instrument was a questionnaire administered to the various stakeholders in
the inventory management process i.e. Staff, Suppliers and Customers (clients) of the
regional medical stores. The findings are as follows;

Table of Content
Declaration........................................................................... 2
Dedication............................................................................ 3
Acknowledgements...............................................................4
Abstract............................................................................... 5
Table of Content...................................................................6
List of Tables......................................................................10
Table of Figures..................................................................11
Chapter 1.......................................................................- Introduction
12
1.1 Background of the Study....................................................12
1.2 Problem Statement............................................................13
1.3 Objectives of the Study.......................................................15
1.4 Research Questions............................................................15
1.5 Significance of the Study....................................................16
1.6 Scope of the Study.............................................................16
1.7 Overview of Methodology...................................................17
1.8 Structure of the Study........................................................18

Chapter 2................................................................Literature Review

20
2.1 Introduction.......................................................................20

2.2 Overview of Inventory Management....................................20

2.2.1 Objectives of Inventory Management............................................25
2.2.2 Motives for Holding Inventory.......................................................26
2.2.3 Inventory Control...........................................................................27
2.3 Efficiency of suppliers and other stakeholders in the inventory
management process................................................................29
2.4 Measures in place to mitigate wastage and corrupt practices
in the inventory management process.......................................32
2.5 Ensuring efficient reduction of inventory management costs 34
2.5.1 Costs in Inventory.........................................................................34
2.6 Challenges and Prospects for the Smooth Operations of
Inventory Management.............................................................41
2.6.1 Classes of Inventory Challenges....................................................41

Chapter 3.......................... Methodology & Organizational Profile

45
3.1 Research Design.................................................................45
3.2 Sources of Data..................................................................46
3.2.1 Primary Data Sources....................................................................46
3.2.2 Secondary Data Sources...............................................................47
3.3 Unit of Analysis..................................................................48
3.4 Population and Sample Frame.............................................49
3.5 Sampling size.....................................................................49
3.6 Sampling technique............................................................50
3.7 Data Collection Instrument.................................................51

3.8 Data Analysis.....................................................................52

3.9 Brief Profile of the Case Study............................................52

Chapter 4.................................- Findings, Analysis and Discussion

54
4.1 Introduction.......................................................................54
4.2 Sample and Response Rate from the Staff and the Suppliers 54
4.3 Demographic Characteristics..............................................55
4.3.1 Demographic characteristics for suppliers....................................56
4.3.2 4.3.2 Demographic Characteristics of Staf...................................59
4.4 Main Question....................................................................61
4.4.1 Inventory Management Practices at the Ashanti Regional Medical
Stores...................................................................................................... 61
4.4.2 Measures put in place to ensure good Inventory practices...........69
4.4.3 IT-based Inventory Management solutions....................................71
4.4.4 Basis for Keeping Inventory at the Required Levels in the Medical
Stores...................................................................................................... 72
4.4.5 The Efficiency of Suppliers and Other Stakeholders in the Inventory
Management Process.............................................................................. 73
4.4.6 Challenges and Prospects of an Efficient Inventory Management
Department at the Ashanti Regional Medical Stores...............................77
4.4.7 Professionalism at the Regional Medical Store..............................78
4.4.8 Processes and Procedures at the Regional Medical Stores............79

Chapter 5...........- Summary of Findings, Recommendations and

Conclusion.......................................................................... 82

5.1 Summary of Findings..........................................................82

5.1.1 Inventory Management Practices at the Ashanti Regional Medical
Stores...................................................................................................... 82
5.1.2 The Efficiency of Suppliers and Other Stakeholders in the Inventory
Management Process.............................................................................. 84
5.1.3 Challenges and Prospects of an Efficient Inventory Management
Department at the Ashanti Regional Medical Stores...............................85
5.2 Recommendations..............................................................86
5.3 Conclusion.........................................................................87

References.........................................................................88
Appendix 1 Questionnaire for Staff....................................93
Appendix 2 Questionnaire for suppliers..............................99

List of Tables
Table 4:1 Sample Rate of Responding Staff & Suppliers..................................................55
Table 4:2 Gender Distribution of Suppliers.......................................................................56
Table 4:3 Inventory Management Practices.......................................................................62

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Table of Figures
Figure 2-1 Stakeholders in the Healthcare Value Chain (Pitta and Laric, 2004)...............30
Figure 4-1 Length of Employment....................................................................................57
Figure 4-2 Educational Qualification................................................................................58
Figure 4-3 Educational Qualification of Staff...................................................................60
Figure 4-4 Inventory Measures in Place............................................................................70
Figure 4-5 IT - Based Inventory Management Solutions..................................................71
Figure 4-6 Basis for keeping inventory within level.........................................................72
Figure 4-7 Efficiency of Suppliers.....................................................................................74
Figure 4-8 Expenditure and Budget Authorization of Medical Stores..............................76
Figure 4-9 Professionalism at the Regional Medical Store...............................................78

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Figure 4-10 Process & Procedures at the Regional Medical Stores..................................80

Chapter 1

- Introduction

1.1 Background of the Study

The process of inventory management in Ghana had previously been left to non qualified
staff and also practiced with loose guarded guidelines. It was a major source of wastage
and corrupt practices. The inventory management process was also known to be very
much sluggish in delivering on time, turn around times were very poor. Experience of
delays and lags was a big impediment to the delivery of urgently needed goods and
service, which led further to business operations stagnation and profit erosion. These
known deficiencies outraged patrons of any outfit, which dealt with inventory
management due to the systems lack of better supply chain management and service
delivery.
The motive for undertaking this research is the experience of the researcher in dealing
with medical and health care inventory management. The major stakeholders of the
services of medical and health inventory management service expect to experience a

12

flawless and efficient inventory management process due to vital and crucial nature of the
health industry. Vicki Smith- Daniels (2006) in a field where precision is literally a matter
of life and death, it seems strange, that a crucial supportive function like inventory
control and purchasing is often a hit-or-miss process. It is therefore prudent for managers
to take a critical look at the inventory management unit and implement and enforce the
needed modern practices relevant to realizing a more efficient inventory management
process.

In Ghana, government health care institutions, just like most governmental institutions
have not paid a lot of attention to developing their inventory management units mainly
because these units are not considered as crucial core function units and for that matter
management falls on them only when the need arises for inventory restocking or
purchasing. On the contrary it has been proven that the inventory management unit
rightly deserves a lot of attention in order to ensure patient safety and reduce overall
healthcare costs.
From both management and operational levels today, inventory management has evolved
to serve its purpose but it also comes along with several enormous and interesting
challenges. There are various aspect of inventory management like stakeholder
relationships, product considerations, and managerial and regulatory policies typically
seen in healthcare are areas, which is seen today to deserve attention from managers and
operators of the unit.

13

It must be stated that inventory management is not an isolated unit and so all other
supporting departments or unit in the value chain will also be affected by the efficiency or
otherwise of the inventory unit.

1.2 Problem Statement

The ultimate objective of institutionalizing inventory management is to ensure efficient
supplies management, avoid wastage and engage in actions that will result in cost
reduction. For this to be achieved there should be strict adherence to laid down guidelines
and rules pertaining to the practice. The complexities and randomness of issues
associated with managing medical and healthcare inventories are varied and various.
Different causes can be accounted for the different problems in the operational process of
inventory management. It means that there should be a continuous improvement planning
aimed at improving operational bottlenecks impeding quality and efficient inventory
management service.
The long term goal of inventory management is to have a clear and vivid understanding
of the root causes that result in inventory management problems. Put in place measure
and guidelines that will outline the current ways of practicing inventory management.
If all the above stated guidelines and measures are not taken, then the management of
inventory will continue to suffer setbacks, inefficiencies and lack of professionalism in
that sector of a broader field of industry. The continued prevalence of the stated problems

14

and challenges in the process of managing inventory will darken the prospect of the
budding profession of inventory and logistics management.
The research will try to ascertain specific inventory control management challenges
relating to efficient healthcare inventory management and possible remedies to these
issues.

1.3 Objectives of the Study

With reference to the statement of research problem, the main objective of the research is
to evaluate inventory management practices using Ashanti Regional Medical stores as the
case for the study to see its effect on health care delivery and how it can be improved.
The following specific objective will guide the progress and direction of the research:
1.

To evaluate the inventory management practices at the Ashanti Regional Medical stores.

2.

To assess the efficiency of suppliers and other stakeholders in the inventory management
process at the Ashanti Regional Medical stores

3.

To assess the challenges and prospects of an efficient inventory management department

at the Ashanti Regional Medical stores

15

1.4 Research Questions

The research will try to answer the following questions emanating from the research
objectives:
1.

What are the inventory management practices at the Ashanti Regional Medical stores?

2.

What is the level of efficiency of suppliers and other stakeholders in the inventory
management process at the Ashanti Regional Medical stores?

3.

What are the challenges and prospects of an efficient inventory management department
at the Ashanti Regional Medical stores?

1.5 Significance of the Study

Because inventory management is a budding career choice these days, it is important as
much research as possible is undertaken in the field to broaden the understanding of the
evolution taking place now. Decision takers engaged in inventory management in Ghana
will have to fall on adequate information in arriving at a very informed decision and this
research will attempt to serve this purpose. This research will also add up to the already
existing information available on the subject of inventory management in Ghana. The
research will attempt to bring to light some major challenges as well as prospects facing
the inventory management and it is expected to aid in drawing up any future restructuring
plan in the sector. The researcher will through this research add knowledge to existing
literature on inventory management practices and also general as a source of information
for the general public whenever the need be.

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1.6 Scope of the Study

This study intends to evaluate inventory management practices using Ashanti Regional
Medical stores as the case for the study and how it can be used to improve health care
delivery. As stated earlier, there are varied and various prospects and challenges affecting
efficient management of inventory at the most Healthcare inventory departments. The
Ashanti Regional Medical stores was chosen for the study because it manages the biggest
stock oh health inventory in the region and perfecting its management will go a long way
to improve the health delivery within the region as a whole. The study will cover all
units in the inventory department and all staff (including managers) with those units will
be engaged in the data acquisition process. Efforts will be made to seek responses from as
much suppliers, vendors and contractors as possible to also capture their views on the
operations of the unit.

1.7 Overview of Methodology

The methodology as its being put in this chapter gives a brief overview of the
methodology to be adopted for the completion of this research. The case to be used for
this research was adopted mainly based on the interest of the researcher to study the
inventory management practice of the healthcare industry. The population under study
comprises of the entire management of the Ashanti Regional Medical stores, all staff
involved in the inventory management process as well as suppliers, vendors, contractors
and consumers of the services of the department. Empirical study using primary and

17

secondary data will be used. Questionnaires and interviews will be employed in the study
A sample size of one hundred and thirty respondents will be engaged in the research
comprising thirty management and staff members of the stores and the one hundred other
stakeholders comprising suppliers, vendors, contractors and consumers of the services of
the stores. The selection will be done using purposive and convenience sampling
technique for the management and staff of the stores whiles a random sampling technique
will be used for the suppliers, vendors, contractors and consumers of the services of the
department.
The responses received from the field data acquisition will serve as a primary data. For
this research, both primary and secondary data will be utilized. The Statistical Package
for Social Science (PSS) as well as Microsoft Excel & Word Office suits will aid in the
data collation and processing of the primary data. The detailed process involved in the
data process will be wholly discussed in chapter. The processes involved includes;
methodology structure, research strategies, the population of the study, sample size,
sampling procedure, methods of data collection and data analysis.

1.8 Structure of the Study

Chapter 1 focuses on the introduction of the various aspect of the research. The main
components of the chapter consist of the background of the study, the problem statement,
and the objectives of the study. Other constituents are the research questions, significance
of the study, scope of the study, overview of the methodology and finally the brief
description of the structure of the study.

18

Chapter 2 will elaborate and review all literature that is accessible and relevant to the
research.
Chapter 3 mainly deals with methodology design used in achieving the set objectives of
the research.

Chapter 4 aims to assess and analyze the data acquired from the field administration of
questionnaires.
Finally, Chapter 5 presents summary of the research findings, conclusions drawn from the
study together wither with recommendations and suggestion for future research.

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Chapter 2

Literature Review

2.1 Introduction
The aim of this chapter is to provide an overview of the theoretical basis for the study.
The main focus is given to the efficiency of suppliers and other stakeholders in the
inventory management process, measures in place to mitigate waste and corrupt practices
in the inventory management process and how to ensure efficient reduction of inventory
management costs. Also discussed are challenges and prospects facing the smooth
operations of inventory management.

2.2 Overview of Inventory Management

Inventory represents an important decision variable at all stages of product
manufacturing, distribution and sales, in addition to being a major portion of total current
assets of many businesses. Inventory often represents as much as 40% of total capital of
industrial organizations (Moore et al. 1993). It may represent 33% of company assets and
as much as 90% of working capital Sawaya & Giauque (2010). Since inventory
constitutes a major segment of total investment, it is crucial that good inventory
management be practiced to ensure growth and profitability.

20

Historically, however companies have ignored the potential savings from proper
inventory management, treating inventory as a necessary evil and not as an asset
requiring management. As a result, many inventory systems are based on arbitrary rules.
Unfortunately, it is not unusual for some companies to have more funds invested in
inventory than necessary and still not be able to meet customer demand because of poor
distribution of investment among inventory items. Temeng et al (2010)
Verma (2010) defines the term inventory is nothing but a stock of goods that is
maintained to facilitate the continuous production of goods and services. Bolter (2001)
observes, The term inventory refers to the stockpile of the product a firm is offering for
sale and the components that make up the products. In other words, it can be said that
inventory is composed of assets that will be sold in future in the normal course of the
business operations.
The dictionary meaning of the word inventory is a detailed list of goods, furniture,
etc. Many understand the word inventory as a stock of goods, but the generally
accepted meaning of the word goods in the accounting language, is the stock of finished
goods only. In a manufacturing organization, however, in addition to the stocks of
finished goods, there will be a stock of partly finished goods, raw materials and stores.
The collective name of al these items is inventory. The assets which firms store as
inventory in anticipation of need are
(1) Raw materials,
(2) Work-in-process (semi-finished goods), and
(3) Finished goods.
21

The raw material inventory contains in terms that are purchased by the firms from others
and are converted into finished goods through the manufacturing process. The work-inprocess inventory consists of items currently being used in the production process.
Finished goods represent final or completed products that are available for sale. The
inventory of such goods consists of items that have been produced but are yet to be sold.
To expand the definitions of inventory to fit manufacturing companies, it can be said that
inventory means, The aggregate of those items of tangible personal property which:
(1) Are held for the ordinary course of business;
(2) Are in process of production for such sales; and
(3) They are to be currently consumed in the production of goods or services to be
available for sale.
Verma (2010) also explains Inventories are expandable physical articles held for resale,
for use in manufacturing a product or for consumption in carrying on business activity.
Examples are merchandise, goods purchased by the business which are ready for sale:

Finished goods being manufactured for sale by the businesses that are ready goods;
Materials articles such as raw materials,
semi-finished products, or finished parts, which the business plans to incorporate

physically into the finished products;

Supplies articles which will be consumed by the business in its operations but will not
be physically as they are a part of the product.

In short, inventory may be defined as the materials which are either in market or usable
directly or indirectly in the manufacturing process and it also includes the items which
are ready for making finished products by some other process or by comparing them
22

either by the concern itself and/or by outside parties. In other words, the term inventory
means the materials having any one of the following characteristics, It may be:
(a) Saleable in the market;
(b) Directly useable in the manufacturing process of the undertaking;
(c) Useable indirectly in the manufacturing process of the undertaking; and
(d) Ready to send it to the outside parties for making useable or saleable products out of
it.
Inventory is called the Graveyard of business because it has been a basic cause of the
failure of many organizations. Inventories constitute the most significant part of current
assets of a large majority of companies. Because of the large size of inventories
maintained by the firms, a considerable amount of funds is required to be allowed to
them. It is, therefore, absolutely imperative to manage inventories effectively and
efficiently in order to avoid unnecessary investment. A firm neglecting the management
of inventories will be jeopardizing its long run profitability and may fail ultimately. So, in
order to manage the inventory properly, a need for inventory management arises.
Inventory management is concerned with the determination of the optimal level of
investment for each component for each component of inventory and the inventory as a
whole, the efficient use of the components and the operation of an effective control and
review mechanism. The management of inventory requires careful planning so that both
the excess and the scarcity of inventory in relation to the operational requirement of an
undertaking may be avoided. Therefore, it is essential to have a sufficient level of

23

investment in inventories. Inventory management may be defined as the sum total of

those activities, which are necessary for the acquisition, storage, sale and disposal, source
of material, D. Schall Lawrence and W. Haley Charles observe, Managing the level of
investment in inventory is like maintaining the level of water in a bath-tub with an open
drain. The water is flowing out continuously. If the water is let in too slowly, the tub soon
gets empty. If the water is let in too fast, the tub overflows. Like the water in the tub, the
particular items of the inventories keep on changing, but the level may remain the same.
The basic financial problems are to determine the proper level of investment in
inventories and to decide how much inventory must be acquired during each period to
maintain that level. Verma (2010).
Howard (1986) observes: The proper management and control of inventory not only
solves the acute problem of liquidity but also increases the annual profits and causes
substantial reduction in the working capital of the firm. It is a subject, which merits the
attention of the top-level management and influences the decision of the planning and the
executive personnel. It is a matter of deep concern to those dealing with production,
sales, forecasting, inventory planning, marketing, material handling, finance, product
designing, etc. Inventory management helps to manage stock in such a manner that there
are no excessive and inadequate levels of inventories and a sufficient inventory is
maintained for the smooth production and sales operation. Thus, the objective of
inventory management is to determine the optimum level of inventory.

24

2.2.1 Objectives of Inventory Management

A fundamental objective of a good inventory management is to place an order at the right
time from the right source to acquire the right quantity at the right place and quality.
While developing an appropriate level of inventory the following objectives should be
kept in mind:
- Investment in inventory should be kept minimum so that undue amount is not locked up
in it as investment in inventories involves costs.
- A firm should make effective efforts in buying quantity of raw materials in accordance
to its needs.
- Continuous efforts should be made to shorten the production cycle. The longer
production cycle runs heavy costs and the risk of the extra inventory investment.
- A firm should maintain inventory to such a level that smooth and unhampered
production is ensured without any obstruction.
- A firm should maintain sufficient amount of finished goods to meet the demand of
customers regularly because if it is not done then the customers may shift to the
competitors, which will amount to a permanent loss to the firm.
- To the extent possible, a firm should try to minimize the possibility of the risk of loss
through obsolescence or shrinkage in the market value between the time of purchase of
manufacture on the one hand and the time of sale, on the other.
- To serve as a means for the location and disposition of inactive and obsolete items of
store.

25

- To keep all the expenditures within the budget authorization.

Inventory management, therefore, should strike a balance between too much inventory
and too little inventory. The efficient management and effective control of inventories
help in achieving better operational results and reducing investment in working capital. It
has a significant influence on the profitability of a concern.

2.2.2 Motives for Holding Inventory

The question of managing inventories arises when the concern holds inventories. Holding
up of inventories involves tying up of the concerns funds and carrying costs. If it is
expensive to hold inventories, why do concerns hold inventories? There are three motives
for holding inventories.
(a) Transaction motive;
(b) Precautionary motive; and
(c) Speculative motives.
Inventories are held merely for the purpose of carrying on transactions smoothly, and at
the same time, ensuring that the cost of ordering is kept minimal. Such a motive is called
transaction motive. Sometimes, inventories are increased as a hedge or protection against
stock-out when it becomes clear to the management that the lead-time for any particular
item is likely to increase or there is a possibility of short supply. This increasing of the
safety stock arises from purely a precautionary motive. Lastly, a situation may arise when
an all- round price increase is expected due to market demand or due to changes in cost.
26

In such a situation, the company management is keen to hold on to the inventories or

increase them in order to get a better price for the finished goods. Such a motive is known
as the speculative motive.

2.2.3 Inventory Control

Inventory control refers to a system, which ensures the supply of required quantity and
quality of inventory at the required time and at the same time prevents unnecessary
investment in inventories. According to Ghosh et al (1995) Inventory control is
concerned with the acquisition, storage, handling and use of inventories so as to ensure
the availability of inventory whenever needed, providing adequate cushion for the
contingencies, deriving maximum economy and minimizing wastage and losses.
Designing a sound inventory control system is in a large measure of a balancing
operation. It is the focal point of many seemingly conflicting interests and considerations,
both shortrange and long-range. Inventory control is concerned with keeping the desired
inventory level and maintaining it. Its basic objective is to keep an adequate inventory
level and maintaining it at the minimum inventory carrying cost. The aim of inventory
management, thus, should be to avoid excessive and inadequate levels of inventories.
Efforts should be made to place an order at the right time with the right source to acquire
the right quantity at the right price and quality. The efficiency of inventory control affects
the flexibility of the firm. Inefficient procedures may result in an unbalanced inventory,
sometimes out of stock or overstocked, necessitating excessive investment. These
inefficiencies ultimately will have an adverse effect on profits. Turning the situation

27

around, differences in the efficiency of the inventory control for a given level of
flexibility affect the level of investment required in inventories.
The less efficient is the inventory control, the greater is the investment required.
Excessive investment in inventories increases costs and reduces profits. Thus, the effects
of inventory control on flexibility and on the level of investment required in inventories
represent two sides of the same coin. In managing inventories, the firms objective should
be in consonance with the wealth maximization principle. Various types of businesses
control inventory for the following purposes to:
ensure a continuous supply of raw materials to facilitate uninterrupted production.
maintain sufficient stocks of raw materials in periods of short supply and anticipate
price changes.
maintain sufficient goods inventory or smooth sales operations and efficient customer

service.
minimize the carrying cost and time.
control investment in inventories and keep it at an optimum level
minimize costs and maximize profits
control capital investment
take advantage of favourable raw material price, and
protection against strikes and work stoppages and acts of God.

to achieve all these the firm should determine the optimum level of inventory and it can
be done through various inventory management techniques. Verma (2010)

28

2.3 Efficiency of suppliers and other stakeholders in the

inventory management process
Burns (2002) examined the healthcare industry for three years to investigate its value
chain, to uncover significant industry trends, and to identify the major stakeholder groups
involved with healthcare services. A significant result of this research was the
identification of the following groups as stakeholders in this industry: 1) payers, 2) fiscal
intermediaries, 3) providers, 4) purchasers, and 5) producers. Each of these groups is
explained in more detail below. Any person or organization responsible for supplying the
funds to pay for medical expenses is identified as a payer. Based on this definition,
examples of payers would include government, employers, individuals and employer
coalitions. Insurance agencies, health maintenance organizations (HMOs), and pharmacy
benefit managers fall under the category of financial intermediaries. Any group
supplying healthcare screening, treatment, or any other healthcare related provisions are
considered to be providers. Such entities would be physician offices, hospitals (or
hospital systems), surgical centers, alternative and satellite facilities, ambulatory services,
and pharmacies. Individuals or groups procuring any of these services are viewed as
purchasers; however, it is important to note that this category extends beyond the basic
consumers of healthcare services. This group also includes a wide variety of product
resellers, independent distributors, pharmaceutical wholesalers, etc. The final group is the
producers whose responsibility is the manufacturing of healthcare products, equipment,
and technology. This includes pharmaceuticals, surgical equipment, information
technology services, medical devices, and other capital equipment found throughout the
healthcare system.

29

The notion of value in the healthcare service value chain can be described by the
interrelations of relevant stakeholders. Pitta and Laric (2004) provide a model of the
healthcare value chain, as it exists in many practical situations. Figure 1 below illustrates
the interrelation of stakeholders.

Figure 2-1 Stakeholders in the Healthcare Value Chain (Pitta and Laric, 2004)

The first two groups interacting in this network are the patients and physicians. This stage
of the process is generally initiated by the patient and provides valuable information
necessary to adequately address whatever needs they might have. This research showed
that individuals are much more likely to share very personal information with their
healthcare providers when they believe this information is needed for medical purposes
and when they trust the confidential nature of the patient-doctor relationship. The next
link in the chain is created by the addition of pharmacists and other providers of medical
30

equipment and services. In this stage the pharmacist creates value by further investigating
the medical history, specifically as it relates to medications, of patients to determine any
potential risks or interactions that may result from the addition of new, prescribed drugs.
This is a very important step in customer service and patient care. The next addition to
the value chain is that of the hospital and the related services and procedures that may be
included in diagnosing patient symptoms. As explained by Pitta and Laric (2004), doctors
often request batteries of tests be performed on patients even when symptoms and other
indicators suggest a course of treatment. Hospitals create and store vast amounts of
medical data for patients, which can be useful going forward. The fifth member of the
healthcare value chain is the health insurers, which includes both public and private
entities responsible for providing financial support to those receiving care. Since many
insurers require a series of diagnostic tests and related data be completed before
approving potentially costly procedures, patient data continues to grow. The addition of
insuring groups or companies can also be a negative influence on the value chain. As one
can see with the addition of new members to the network and the creation of data at each
stage, the healthcare system and participant interactions are becoming more and more
complex. Employers are the sixth group added to create another value chain. In the
United States (US) employers are the most often used source of medical insurance for
employed persons and their families. Here the value is obtained by negotiating better
benefits for groups of people as opposed to those offered to individuals. When the US
Government introduced its Federal Medicare and Medicaid programs in the 1960s, it
became the largest medical insurance provider in the United States. A result of this
involvement is the increasing influence of government regulation and policy in the

31

healthcare industry. As such, government becomes the seventh participant of interest here
as it influences various parts of this system. The final member of the model is the
pharmaceutical manufacturer. It has already been established pharmaceuticals represent a
significant area of cost in the healthcare industry, as well as being the primary means of
preventative and curative medical treatment, Woosley (2009).

2.4 Measures in place to mitigate wastage and corrupt

practices in the inventory management process
Managerial decisions have a huge impact on levels of inventories. According to Baveld
(2012), during the seventies and eighties of the 20th century, Japanese manufacturing
companies increased their activities significantly in the U.S. markets. They also brought
in new ideas of managing companies and since they increased their market shares
substantially, it was apparent that some of these new ideas of managing were very
successful. One of these ideas affected the way of managing inventories, which was
called the Just-In-Time (JIT) inventory management system. The basic idea of this
system was that companies should deliver products to their customer just-in-time. By
doing this, companies wont have to have large amounts of stocks to be able to deliver
goods. This saves a lot of costs concerning inventory stocking. The question of whether
companies in the U.S. did decrease their amount of stocks was studied by Chen et al.
(2005). They found that a large number of companies did significantly reduce their
inventory levels. This reduction was mostly implemented on the levels of work-inprogress inventory. This decrease in inventory levels is also found by Rajagopalan &

32

Malhorta (2001) who studied a number of industries in the manufacturing sector in the
U.S. Baveld (2012).
Various models have been developed by experts in the field of inventory management to
manage cost and reduce wastage. Some models consider the case of lost sales. Nahmias
and Smith (1994) examine a two-echelon supply chain where stock outs can penalize the
retailer in cases where the customer is unwilling to wait for their order to be filled. The
authors assume instantaneous deliveries from the warehouse to the retailer, which is often
not the case in practice. Andersson and Melchiors (2001) executed a similar study that
allowed for excess demand to be handled using backorders. The supply chain in this work
was comprised of one warehouse with multiple retail outlets being serviced. Demand
here is independent Poisson processes, and lead times are considered constant. The
heuristic developed by the authors provides a mechanism to evaluate this type of supply
network on elements of cost and service level. Other research examining the lost sales
case is that of Hill et al. (2007), which looked at inventory control in a single-item, twoechelon system with a continuous review policy. Again, a central warehouse services
several independent retailers and then has its stock replenished by an external supplier.
The system operates such that any excess customer demand at the retailer can be filled
from the warehouse provided the item is in stock; however, any items, which are not in
stock, result in lost sales. Lead-time for the retailer is equal to the transportation time
required to move the item from the warehouse to the specific retail outlet. The influence
of order risk was examined by Seo et al. (2001) in a two-echelon distribution system.
They claim that the service policies should reflect the availability of real-time stock
information. Their model adjusts the reorder time on the basis of an approximated order

33

risk, which is associated with orders that are filled immediately versus those that are
delayed. Results show that this order risk policy performed well when warehouse leadtime was short, where item demand was low, and where there were an intermediate
number of retailers in the supply chain. Woosely (2009)

2.5 Ensuring efficient reduction of inventory management

costs
2.5.1 Costs in Inventory
Liang (1997) indicates that most inventory models are built around the assumption that
the objective is to minimize inventory costs that basically fall into four broad categories
as follows:
1.

Item cost is the cost of buying and/or producing the individual items. The cost of items is
often an important consideration when quantity discounts are offered. The item cost can
usually be obtained from vendors.

2.

Ordering cost is incurred because of the work involved in placing purchase orders with
vendors or to organize for production within a plant. This cost should include the costs of
acquiring the data necessary for making decisions, computational cost, stationary,
telephone calls, transportation, receiving and inspection. The ordering cost can be
estimated from the company's records. However, difficulties are sometimes encountered
in separating the fixed and the variable ordering-cost components.

34

3.

Holding cost is associated with keeping items in inventory for a period of time. The
holding cost usually consists of electricity and heat, insurance and tax, spoilage and
obsolescence, the cost of capital and the expenses of running the warehouse. This cost is
more difficult to determine accurately in terms of historical information. In practice,
however, the estimation of holding cost is often based substantially on managerial
judgment.

4.

Stock out cost reflects the economic consequences of running out of stock. It is the most
difficult of all inventories, costs to estimate. One approach is simply to specify an
acceptable stock out risk level. Another interesting method used by Reimans et al. [9] is
to treat the unit shortage cost as a function of the gross profit of an item. This approach
has the advantage of resulting in better service for higher profit items. It is relatively easy
to list the contents of each category of inventory costs as mentioned above. However,
their measurement in practice is a very difficult task. In particular, accounting
information primarily collected and recorded for a financial purpose is usually
inappropriate for estimating inventory costs. Furthermore, shortage costs are often not
shown in accounting records. There is no satisfactory solution to this problem and more
research work is needed to establish methods for estimating inventory costs. Liang (1997)
According to Woosely (2009), Hollier et al. (2005) developed a modified (s, S) inventory
model to address cost control issues specific to lumpy demand patterns. This approach
integrated a maximum issue quantity restriction and a critical inventory position as
constraints influencing the inventory control policy. Here the primary objective was to
minimize the system replenishment costs. These authors applied two algorithms, one
being a tree search and the other a genetic based, to optimize the decision variables. The
35

numerical examples and results illustrate the benefits of employing such algorithms, as
well as, demonstrate the utility of the maximum issue quantity and critical inventory
position constraints when managing lumpy demand items. Syntetos and Boylan (2006)
employ simulation models to provide an evaluation of various forecasting techniques,
specifically simple moving average, single exponential smoothing, Crostons estimator,
and a new technique introduced in their paper, when handling lumpy or intermittent
demand items. Service level and stock volume were evaluated using a number of
performance measures related to customer service and inventory costs. In this case the
authors reported that the new estimator they developed outperformed other forecasting
techniques as an inventory control method; however, it is important to recognize that the
simple moving average technique yielded favorable results as well compared to the other
two methods.
Dellaert and van de Poel (1996) derived a simple inventory rule, a (R, s, c, S) model, for
helping buyers at a university hospital in the Netherlands. The notations of s and S were
defined previously, and there meanings remain the same. Here R represents the length of
the review period (time between orders) while c is the can-order level. Since most items
have a joint supplier and the orders for a certain supplier are always placed on the same
day of the week, they extended an EOQ model to a so-called (R, s, c, S) model, in which
the values of the control parameters s, c and S are determined in a simplistic manner. This
approach resulted in substantial gains, which were observed in improved service levels,
reductions in supplier orders, smaller total inventory levels and holding costs, and
substantially lower system costs, for the participating hospital, (Woosely, 2009).

36

Other strategic approaches that have been pursued in the area of supply chain
management and inventory control include the outsourcing of distribution activities,
allowing suppliers to manage inventory levels at various distribution points, and the use
of common statistical techniques to achieve organizational and system goals.

Outsourcing: Kim (2005) presents an explanation of an integrated supply chain

management system developed to specifically address issues related to pharmaceuticals
in the healthcare sector. Many industries have recognized the importance of improved
information sharing throughout the supply chain. Here the supply network is composed
of pharmaceutical companies, a wholesaler, and hospitals. The hospitals operating
procedures and policies were reviewed to determine system requirements in an effort to
improve the management efficiencies of the supply chain. Jayaraman et al. (2000) present
several tools and practical ideas to improve the flow of materials in a small healthcare
facility. Traditional techniques, such as Pareto diagrams and department-product-type
(DPT) matrices, were employed to track item flows and identify sources of errors or
difficulties. Researchers suggested several procedural and policy changes be
implemented to reduce inventory management problems. Landry and Beaulieu (2000)
present a descriptive study of logistics systems at hospitals from three countries France,
Netherlands and The United States to identify the best practices for replenishment
policies, equipments, and handling technologies.
Nicholson et al. (2004) compared the inventory costs and service levels of an internally
managed three-echelon distribution network and contrasted it with an outsourced two-

37

echelon distribution network. Their research revealed that a general trend in healthcare is
the outsourcing of specific organizational activities, inventory management, and materials
distribution to expert third-party providers. When outside entities can provide needed
products or services more efficiently than internal departments, it can prove very
rewarding. In other instances outside providers may demonstrate the ability to provide the
desired products or services at a higher level of quality than an organization may be
capable of achieving (Lunn 2000). A long-term benefit of outsourcing is the ability to
reduce the number of suppliers in the system, which will eventually lower the
procurement costs for the downstream members of the supply chain. As such, the shortterm benefits of increased efficiency and higher quality along with the long-term benefit
of lower procurement costs make outsourcing a logical approach to overall cost
containment in the healthcare industry and consistent with current practices in inventory
management (Veral and Rosen 2001). Outsourcing decisions in this area are motivated by
three factors: the magnitude of investment, the impact on service quality and delivery,
and the availability of qualified service providers. Quality of service is arguably the
paramount goal of healthcare providers (Li and Benton 1996), and it has been suggested
that outsourcing various functions allows organizations to improve the quality of its
internal operations. Jarrett (1998) identified several areas in which providers were able to
improve internal performance. Patient care was improved, which can influence customer
satisfaction and perceptions related to the quality of service provided by an organization.
As the expertise develops and the capabilities of external sources grow, outsourcing
becomes an increasingly attractive option. Another motivation for healthcare providers

38

considering outsourcing the inventory management functions are the success stories
similar to those described by Rivard-Royer et al. (2002).
Rivard-Royer et al. (2002) examined the changing role of distributors in the healthcare
industry in recent years by investigating how operational processes had changed at a
Quebec hospital As reported by Jarrett (1998), the ever-increasing desire to control
healthcare costs have led hospitals to re-evaluate many of their previous policies and
operations. Inventory control is a logical area where substantial gains can be realized.
Pharmaceuticals represent a significant cost equation related to both hospital inventory
and quality patient care. As such, many hospitals and hospital systems have focused on
this specific material management issue when restraining costs. US pharmaceutical
distributors were offering stockless replenishment where the distributors would
prepackage items based on usage at individual care units (CUs) and would often provide
direct delivery of drugs to these CUs (Henning 1980). By employing such a system the
distributors share in the benefits and risks associated with pharmaceutical savings or
costs. The reduction in pharmaceutical inventory located at the hospital central pharmacy
saved hospitals valuable resources, and the shifting of duties from the pharmacies to the
distributors allowed the hospitals to reduce their workforce. Another improvement was
noticed in enhanced customer service. However, as one would expect, a critical success
factor in achieving any benefits from such a relationship and process is the continuous
exchange of information between the point of use and supplier (Bolton and Gordon
1991).
Supply Coordination and Vendor Managed Inventory: According to Rivard-Royer
and colleagues (2002), by the late 1990s stockless replenishment was a thing of the past
39

as hospitals sought a balance between the amount of effort being spent in replenishing
hospital inventories and the hospitals inventory savings. The hospital involved with this
study employed a hybrid approach since high-demand items were purchased in bulk (at
the case level) for delivery directly to the patient CUs from distributors and low-volume
items were handled by the pharmacy Central Storage (CS). For these low-demand items
the CS was charged with breaking-down the bulk purchases into smaller quantities for
distribution to the various CUs as items were used. However, this hybrid approach was
found to have limited benefits to both the hospital and distributors. Distributors were
asked to perform additional work without receiving a comparable level of additional
revenue. The hospital was still unpacking, repacking, and preparing drugs for distribution
to the CUs and failed to realize significant workload reductions as a result of this
replenishment approach. Overall, the gains were very limited in this particular study. One
managerial shift has been to vendor-managed inventory (VMI), which has been shown to
have benefits related to enhanced material handling efficiency.
Other trends in supply coordination have included online procurement systems and the
availability of real-time information sharing. These advances have demonstrated an
ability to reduce total pharmaceutical inventory by more than 30% (Kim 2005). In
addition, the improved information sharing throughout the supply chain allowed for more
timely and accurate inventory data, which resulted in better demand forecasts and
materials management. Woosely (2009)

40

2.6 Challenges and Prospects for the Smooth Operations

of Inventory Management
2.6.1 Classes of Inventory Challenges
The crucial distinction in inventory management is drawn by the nature of demand for
items. Liang (1997). A very useful classification of demand was proposed by Orlicky,
(1975). He used the term "independent demand" to describe any demand of items that is
influenced by market conditions and unrelated to demand for other items in a company's
inventory. This includes the demand for finished goods and spare parts. He also used the
term "dependent demand" to describe any demand for items directly determined by other
associated items. Typical of this are raw materials, purchased or manufactured parts or
ingredients, and manufactured subassemblies, attachments and accessories.
It is Orlicky's classification that provides the real key to selection and applicability of
inventory control techniques aimed at addressing inventory related challenges. Dependent
demand, by definition, can be precisely determined from the demand of related items, and
the methods of material requirements planning (MRP) and just-in time (JIT) are the
appropriate techniques to treat this kind of inventory problem encountered in
manufacturing companies.
Liang (1997) explains that the key ingredients of MRP are master production schedule,
bills of materials, and inventory recorders. Using information from these sources, the
MRP system identifies actions such as releasing new production orders, adjusting order
quantities, and expediting late orders. JI'T systems are designed to produce or deliver
goods or services as need, using minimal inventories. It is actually a philosophy that

41

focuses on reducing inefficiencies and unproductive time in the production process. Both
MRP and JIT are more than inventory control systems; they also involve process design
and scheduling issues. For independent demand items, there is a large variety of
inventory problems identified by the essential characteristics of the inventory system and
many hundreds of inventory models have been developed to handle this kind of inventory
problems.Liang (1997)
Hospitals have typically employed a variety of methods and policies to resolve
pharmaceutical inventory management issues. A few of the more prominent solutions are
discussed in this section to demonstrate the modern approaches seen in industry.
Specifically, outsourcing, VMI, and information system (IS) based solutions are
presented.
Outsourcing
Outsourcing has been widely used in the healthcare industry. Regardless of the specific
product, entering into partnerships with suppliers and distributors for the purposes of
combining services have generated benefits for the healthcare providers . The magnitude
of resources linked to pharmaceutical inventory and its management, the desire to shift or
reduce pharmacy workloads, and the opportunity to refocus resources on patient care
make this an appealing proposition for healthcare providers. However, as shown by
Rivard-Royer et al. (2002), all parties must benefit from such arrangements to provide
long-term gains.
Vendor Managed Inventory (VMI)

42

Another trend is the growing usage of VMI strategies (Kim 2005). This a specific type of
outsourcing in which pharmaceutical inventories located at various distribution locations
(i.e. at the CUs) around the hospital are monitored by the supplier, in this case the
pharmaceutical company or distributor, and replenished as needed. Currently, several
hospitals employ a continuous review (s, S) inventory control policy. When demand for
an item reaches a pre-determined minimum level (s), an order is automatically generated
and transmitted directly to the supplier. The supplier, in turn, ships the amount necessary
to refill the distribution centers to the maximum quantity (S). Depending on the specific
circumstances, materials can be either sent to the pharmacy for re-packing and
distribution or sent directly to the point-of-service, which bypasses the pharmacy entirely.
IT-based Inventory Management Solutions
Information systems play a significant role in all of the aforementioned suggested
approaches; however, they are perhaps even more critical in the next solution. Perini and
Vermeulen Jr. (1994) reviewed a number of devices focused on the dispensation of
medicines located around the hospital in the patient care unit with the purpose of
replacing the traditional dosage carts used by pharmacies and to shift control of locallystored pharmaceutical inventories and controlled substances to caregivers at the point of
use. Inventory stored in the CUs offer caregivers the opportunity to dispense medications
quickly to patients; however, restocking these units can take extra time. These
medication-management machines are designed to offer financial and practical
advantages over traditional operating procedures where inventories are stored in a central
pharmacy and then distributed by dose carts as needed. Another benefit of using these
local devices is the ability to quickly create, store, and access point-of-service patient
43

information, which can also expedite the documentation requirements associated with
drugs. The technology employed by these solutions enhances operating efficiency and
facilitates customer care by lowering the risk of patients receiving incorrect medications.
Regardless of the specific solution, these systems usually offer pharmaceutical
administrators the ability to reduce inventory carrying and other costs, to improve billing
and usage information, and to increase staff productivity by creating a highly-integrated,
data-driven information flow, Woosely (2009).

44

Chapter 3

Methodology & Organizational Profile

3.1 Research Design

This research will have both quantitative and qualitative research characteristics with the
aim of ensuring that the findings of this study are as expected. The findings will be
presented using a descriptive research methodology.
The decision to adopt a quantitative research approach stems mainly from the fact that
one of the characteristics of quantitative research is its ability to emphasize on
quantification in the data collection and analysis process. These enable researchers to
draw quantified conclusions and also relate both theoretical framework and the research
being undertaken. Andersen, (1998) explain that quantitative research approach allow for
thorough and systematic examination, which is very crucial in the attainment of good
research results. The quantitative research approach is seen as an expedient one because
the researcher wants to arrive at a good result to help achieve the realization of the
research objective.
Another crucial approach is the qualitative research methodology, which is somehow
contradictory to the quantitative approach because it rather uses descriptive solutions
instead of quantified solutions. It is an acceptable and preferred approach because it uses
words and narration to churn out the findings of the study. Qualitative research approach
normally aims to emphasis on the theory generation. The study is also incorporating
qualitative because Guba & Lincoln, (1989) argues that qualitative research seeks to
obtain unadulterated descriptions of either developing or existing phenomena from one or

45

several respondents with strong capabilities and in-depth knowledge of the research
objective.
After the two research approaches are applied to the acquired data, the final presentation
of the findings is presented using the descriptive research methodology. The name
descriptive gives a fair idea of the characteristics of the method. Kinnear &Taylor, (1996)
describes descriptive research methodology as having the major purpose of describing
prevailing business situations and phenomena. Zikmund (1997) also states that it tackles
the who, what, where, why, and how aspects of any research. It is by these standards
that the descriptive research methodology has also been adopted for this research. It will
aid the researcher to determine the frequency of occurrence, the degree of association of
certain variables and also possibly predict the occurrence of the phenomena being studied
by this research.

3.2 Sources of Data

This thesis will make use of both primary and secondary data at the convenience of the
researcher. Data will be sort from these sources as and when the researcher deems it
prudent.
3.2.1 Primary Data Sources
Churchill & Iacobucci (2002) stated that the researcher for the purpose of the
investigation being conducted originates primary data. All the findings of this study will
be drawn from the analyzed primary data. Data gathered in its original form by the

46

researcher to fulfill a particular objective is termed as primary data and is mostly gathered
through interviews, surveys and the direct observation, Sarantakos (1998).
The primary data for this study is gathered from the responses gotten from the
questionnaires administered to the members of staff of the regional medical stores as well
as suppliers & clients who have a stake in the effective operation of the regional medical
stores.

3.2.2 Secondary Data Sources

Secondary data sources are sources that any researcher can readily and easily access
secondary data that is useful for the completion of any study. This secondary data is not
in their original form but rather they are most in the form that is determined by the
originator of that data. Secondary data are not primarily created for the research in which
they are used, Sarantakos (1998).
Secondary data can be accessed from sources such as journals, library archives,
textbooks, memoranda, progress reports, etc. the information gotten from these sources
can also be reviewed and reanalyzed to suit the new user in order to serve the purpose for
which it is being sort after. The use of secondary data is mostly not solve the particular
problem under study but it rather helps clarify the problem being studied, serves a
suggestive data for benchmarking upon which the primary data can be insightfully and
properly interpreted. The researcher has taken all these characteristics of the secondary
data into consideration before adopting its usage.

47

Secondary data has a great influence on the literature review as well as forms the basis
for the analysis of primary data. Secondary data can also be said to be flexible because of
the ability of it tweaked to serve different purposes. Ghauri P. et al., (1995) point out that
the major advantage of using secondary data is saving in time and money mainly due to
the fact that the researcher can directly access with having any confusion over where to
locate secondary data. The down side of secondary data is that sometimes it is outdated
and over used by other researchers. The correctness of any used secondary data is also
correct to degree of correctness of the primary data used in establishing that secondary
data.

3.3 Unit of Analysis

The main unit of this study will be members of staff of regional medical stores as well as
suppliers, vendors and contractors who have direct dealing with the stores. This choice is
made because the main objective of the study is to assess effects of inventory
management practices on health care delivery using the Ashanti regional medical stores
as the case for the study. The department of the health sector is very crucial to the
effective operation of the health sector. It can be deduced that the choice will give a true
reflection of the prevailing situation in terms of effectiveness of inventory management in
the health sector in Ghana.

48

3.4 Population and Sample Frame

One of the methods adopted for the completion of this study is the qualitative research
method. By adopting this method, Merriam (2002) explained that the researcher seeks to
have a better understanding of prevailing phenomena within certain context or situation
giving particular and strict attention to the perception and experiences of the population
under the study.
The population for this study is selected from members of staff of the government
medical stores in Ghana as well as all their suppliers, vendors and contractors. This is the
larger population in the government medical sector who influence or is influenced by the
effectiveness or otherwise of the medical inventory management. For the completion of
this study, a sample will be drawn from the above mention target population.

3.5 Sampling size

The health sector medical stores are numerous and scattered across the whole nation
because of its peculiarity and importance in ensuring efficient health delivery in the
country. The size of all the medical stores put together is too large for this study to
sample, so the researcher has decided to narrow down the sample of this study to only the
Ashanti regional medical stores.

The findings of any study are dependent on the choice of target population and
chosen sample size. Steenkamp and Hofstede, (2002) argues that the choice and
relevance of both the target population and sampling framework must be
thoroughly and carefully observed from the beginning of the study. It is very
49

important for studies embracing the quantitative research methodology to generate

a representative sample framework.
For this study the sample chosen is a follows:

70 members of staff of the Ashanti regional medical stores

40 respondents from both clients and suppliers of the Ashanti regional medical stores
These two groups of respondents are recognized as the most vital in the objective of this
study and as such their opinions will represent the exact situation on the ground.

3.6 Sampling technique

This study is seeking to conclude on finding from the experiences and knowledge of a
particular case study. The purposive sampling technique is the most suitable for the
completion of the study. Maxwell (2005) indicated that purposive sampling enables the
receipt of data from the most relevant sample for the study, which gives a reliable
presentation of subject being studied.
Purposive sampling involves the selection of sample based on their knowledge and
experience of the subject being studied. Trochim, (2006) stated that purposive sampling is
a form of non-probability sampling, which is used when the researcher has a purpose for
sampling those people for interview. It is based on these predetermined characteristics of
purposive sampling that the researcher has also decided to adopt it for the completion of
this study.

50

Another good side of purposive sampling technique is by Devers & Frankel (2000) who
explains that purposive sampling gives the researcher confidence and a sense of validity
in the research finding(s).

3.7 Data Collection Instrument

A survey is conducted from the case under this study to seek the views and opinions of
the relevant respondents of the chosen sample. Cooper and Schindler, (2001) describes
survey as a means of questioning respondent(s) via a set of questions for the
respondent(s)
The main instrument for conducting the survey for this study is the questionnaire. There
are 3 main approaches from which to choose when conducting an interview with a
questionnaire, structured, semi-structured and unstructured questionnaire, Descombe
(2000). These three approaches have their peculiar characteristics and the purpose for
which they can be used.
For this research, a structured questionnaire is the major instrument used to collect the
relevant primary data. The structured questionnaire is characterized by strong control
over the questions and answers. This means that the respondent(s) will have to attend to
specific responses and is very unlikely to deviate from those answers. The questions of a
structured questionnaire is strictly closed ended and also doesnt make room for
suggestions from the respondent(s).

51

3.8 Data Analysis

After the collection of the administered questionnaire, the first analysis process is to put it
through a compilation process using SPSS. This process compiles all the responses on the
questionnaires compiled into one unit basically to ease the process on analyzing the data.
After the compilation, the data is transferred to MS Excel for the analysis in the specific
form that will suit the researcher in obtaining interpretation, findings and finally draw
conclusions. The findings, presentation of findings and conclusion is done using MS
Word. If the need arises for the use of any other application, the researcher will readily do
so.

3.9 Brief Profile of the Case Study

The Ghana Health Service as by law is established to manage and direct the delivery of
health care in the country. Regional Health Directorates headed by the Regional Director
of Health Services are in the capital towns/cities of the country of the 10 political
administrative regions of the country.
The Regional Medical store is a sub Budget Management Centre (BMC) under the
regional health directorate. Its management therefore administratively reports to the
Regional Director and the senior managers of the health directorate.
A manager heads regional medical store with a management team which consist of a
supply officer, an accountant, production manager and a pharmacy manager. The unit is

52

basically responsible for the continuous availability of health commodities in the Ashanti
Region. It stores and distributes these commodities.

53

Chapter 4

- Findings, Analysis and Discussion

4.1 Introduction
This chapter deals with the analysis of all the data and the presentation of the findings
from the data collected from the fieldwork. A comprehensive questionnaire for staff and
suppliers were administered to some selected members of the Regional Medical stores,
all staff involved in the inventory management process as well as suppliers, vendors,
contractors and consumers of the services of the department in the Ashanti region.
The analysis is aimed at establishing valid points in answering the research questions to
be able to achieve the research objectives and ultimately come out with the relevant
conclusions and recommendations.

4.2 Sample and Response Rate from the Staff and the
Suppliers
The study used a sample of 100 suppliers and 30 staff members. Out of this, 97
questionnaires from the suppliers and 28 questionnaires from the staff were received by
the researcher. For the questionnaires, which were not returned, there was no explainable
reason for it on behalf of the respondents but the researcher deduced that it could be as a
result of the inability to contact these respondents.
The table below indicates the response rates for both the staff and the suppliers after the
delivery of the questionnaires.

54

Table 4:1 Sample Rate of Responding Staff & Suppliers

Category of Respondents

Sample Size

Received Response

Response

Ratio

(%)
Suppliers

100

97

97

Staff

30

28

93.3

Total

130

125

96.2

Source, Field survey 2013

It can be observed from the table 4.2 above that 96.2% of the total questionnaires were
returned to the researcher. These consisted of 93.3% return rate by the staff and 97% by
suppliers.

4.3 Demographic Characteristics

This part of the research discusses some demographic characteristics for both suppliers
and staff involved in the study. The demographic characteristics discussed in this research
include gender, age, educational qualification and number of years of work.

55

4.3.1 Demographic characteristics for suppliers

4.3.1.1Gender distribution of suppliers
Table 4:2 Gender Distribution of Suppliers

Gender

Frequency

Percentage (%)

Male

56

57.7

Female

41

42.3

Total

97

100

Source, Field survey 2013

It can be seen from Table 4.2 above that out of the 97 respondents (suppliers), 56
representing 57.7% are males whiles the remaining 41 (42.3%) are females. This implies
that a majority of the respondents involved in the study are males. The female to male
ratio therefore is 1:1.4. It can therefore be deduced from the data above that the number
of males interested in this field is more than the females as shown by the data above.

56

4.3.1.2Work Experience of work suppliers

Number of years of work

Number of years of work

number of respondents

Figure 4-2 Length of Employment

Source, Field survey 2013

In the graph above representing the number of years that the respondents have worked as
suppliers, it can be observed that a majority of the respondents (39.2%) have worked
from 3 to 4 years. This is followed by 2 3 years (25.8%), 1 -2 years (13.4%), 4 -5 years
(10.3%), 7.2% of them have also worked for 5 years and above with a minority of them
(4.1%) having worked below a year. This therefore indicates that almost all the
respondents involved in the research have enough experience, which will go a long way
to improve upon the validity of the results of the study.

57

4.3.1.3Educational Qualification

This part of the study sought to find out the educational qualifications of the respondents
(suppliers) involved in the study. The results from the data collected are presented in
figure 4.2 below.

Educational Qualification
SSCE

HND

1st Degree

16%

2nd Degree

25%

31%
28%

Figure 4-3 Educational Qualification

Source, Field survey 2013

The results from the data collected from the field survey on the Educational Qualification
of respondents revealed that 30 of them (30.9%) had a first degree Qualification, 27.8%
with HND, 24.7% with an SSCE qualification and the remaining 16.5% which is the
minimum with a 2nd degree. From the data above, the educational qualification of the

58

respondents is quite impressive as a majority of them have a first-degree qualification.

This implies that the suppliers will have enough knowledge of their work and hence help
improve their work.

4.3.2 4.3.2 Demographic Characteristics of Staff

Number of Years of Employment
Figure 4.3: Number of Years of Employment
Number of years of work

below 1

1 to 2

2 to 3

3 to 4

4 to 5

5 and above

Source, Field survey 2013

The researchers tried to find out the number of years that the staff involved in the study
had worked in their organization. The findings of the study are presented in the graph
above.

59

From the graph, out of the 28 respondents (staff) involved, 28.5% of them representing
the majority of the staff had worked between 4 to 5 years, followed by 21.4% of them
who had worked between 3 to 4 years. 17.9% of them had also worked for 2 to 3 years
and 14.3% and 10.7% had worked for 5 years and above and below 1 year respectively.
The above data reveals the notion that the employees of the various medical stores and
institutions have had enough experience in their work. From the researchers view, this is
likely to have a positive impact on the delivery of health care in the region.

4.3.2.1Educational Qualification of the Staff

Figure 4-4 Educational Qualification of Staff

Source, Field survey 2013

60

The data from the figure above reveals that out of the 28 respondents, a majority of them
hold a first degree qualification (50%). 17.9% of them also have an HND qualification
followed by 21.43% of them who hold SSCE qualification and finally 10.71%
representing the least or minority with a 2nd Degree Qualification. The analysis of the data
above shows that half of the respondents possess a first degree qualification and this will
help improve upon their service delivery in the region.

4.4 Main Question

4.4.1 Inventory Management Practices at the Ashanti Regional
Medical Stores
According to (Moore et al., 1993), inventory often represents as much as 40% of total
capital of most organizations. There is therefore the need to undertake proper inventory
management practices in order to ensure the growth of any institution.
The researcher therefore at this point of the study sought to evaluate the inventory
management practices in the various medical stores in the Ashanti Region. This was done
by looking at various practices undertaken by the staff and suppliers of the various
Medical stores in the Ashanti Region. This was done to unearth the success or otherwise
of Inventory Management Practices in the Region. To achieve this, the researchers
required the staff of the various Regional Medical stores to indicate whether they strongly
agree (1) agree (2), are undecided (3), disagree (4) or strongly disagree (5) to some of the
items from item 1 to 19 of the staff questionnaire. The results from the data after the
collection of the questionnaire are presented in the table below.

61

Table 4:3 Inventory Management Practices

Item
Inventory kept at the right levels

8(28.6%)

14(50%)

2(7.1%)

3(10.7%)

1(3.6%)

Effort and planning is put into

16(57.1%

6(21.4%)

2(7.1%)

1(3.6%)

3(10.7)%

ensuring that the right quantities

5(17.9%)

1(3.6%)

9(32.1%)

2(7.1%)

7(21.4%)

2(7.1%)

10(35.7%

4(14.3%)

to ensure that the medical store

doesnt run out of essential
requirements

are purchased in accordance

with the needs of the end users
Much importance is attached to

10(35.7%

ensuring products serve their use

within their product life cycle

The operations of the medical

5(17.9%)

stores are such that it keeps its

expenditures within the budget

authorization
You are satisfied with the level

6(21.4%)

8(28.6%)

of adherence with the control

measures put in place at the
medical stores to ensure the
minimization of deviations from
laid

down

rules

concerning

62

3(10.7%)

9(32.1%)

2(7.1%)

inventory control
Your

outfit

ensures

that

14(50%)

7(21.4%)

1(3.6%)

4(14.3%)

2(7.1%)

5(17.9%)

8(28.6%)

3(10.7)%

10(35.7%

2(7.1%)

inventory is maintained at a
level that is smooth and also
doesnt hamper the operation of
end users.
The

medical

store

maintain

sufficient amount of end user

required products to meet end

user needs regular
The medical stores frequently
experience

11(39.3%)

6(21.4%)

4(14.3%)

3(10.7%)

4(14.3%)

8(28.6%)

5(17.9%)

2(7.1%)

6(21.4%)

7(21.4%)

8(28.6%)

12(42.9%

1(3.6%)

5(17.9%)

2(7.1%)

2(7.1%)

3(10.7%)

3(10.7%)

the incidence of

obsolescence and out of date

within stock
The concept of outsourcing in
the operation of the medical
store is very important
The medical stores employs the
use

of

vendor

managed

inventory [VMI] systems

You

are

operations

satisfied
of

the

with

the

vendor

7(21.4%)

13(46.4%
)

managed inventory systems

63

The

level

of

efficiency

of

6(21.4%)

8(28.6%)

5(17.9%)

4(14.3%)

5(17.9%)

14(50%)

7(21.4%)

1(3.6%)

4(14.3%)

1(3.6%)

5(17.9%)

3(10.7%)

3(10.7%)

10(35.7%

7(21.4%)

suppliers in the execution of the

contracts

won

are

very

satisfactory
The patronage of the services of
the regional medical stores is
very satisfactory
You

are

satisfied

with

the

functionality of the IT based

inventory management solutions

You are very satisfied with the

6(21.4%)

number of suppliers transacting

15(53.6%

2(7.1%)

2(7.1%)

3(10.7%)

5(17.9%)

4(14.3%)

1(3.6%)

business with the medical stores

Your

outfit

frequently

experience suppliers failure to

8(28.6%)

10(35.7%
)

deliver with the expected time

frames
Source, Field survey 2013
From Table 4.3 which shows the findings from the data on Inventory Management
Practices at the Ashanti Regional Medical Stores, out of the 30 respondents to whom the
staff questionnaires were administered, 28.6% strongly agreed, 50% agreed, 10.7%
disagreed and 3.6% strongly disagreed and the remaining 7.1% were uncertain as to

64

whether their inventories are kept within the right levels to ensure that the medical stores
doesnt run out of essential requirements.
Also, the researchers tried to find out whether enough effort and planning is put into
ensuring that the right quantities are purchased in accordance with the needs of the end
users. A majority of the respondents (57.1%) strongly agreed to this assertion whiles
3.6% of them disagreed. This therefore implies that the various regional medical centres
do purchase the right quantities in accordance with the needs of the end users.
In addition, 35.7% strongly agreed to the notion that much importance is attached to
ensuring that products serve their use within their product life cycle, 17.9% agreed, while
32.1% of the respondents disagreed to this point. Also out of the remaining 10.7%, 7.1%
strongly disagreed whiles 3.6% were uncertain. This implies that the Medical stores do
attach much importance to ensuring that products serve their use within their product life
cycle and this can militate against the delivery of medical care in the Region.
Also, the manner in which the medical stores handle their expenditures greatly affects the
delivery of health care. According to colletti (1994), Health care reforms at hospitals are
differentiated by how they manage the cost of services. The researcher went on to find
out about the operations of the medical stores in relation to their expenditures. A greater
percentage of the respondents (staff) disagreed that the operations of the medical stores
are such that it keeps its expenditures within the budget authorization (35.7%), 14.3%
which is the minority also strongly disagreed to this same statement. It therefore stands to
reason that the medical stores do not keep their expenditures within the budget
authorization.

65

On the issue of the level of adherence with the control measures put in place at the
medical stores to ensure the minimization of deviations from laid down rules concerning
inventory control, 7.1% strongly disagreed and 32.1% also disagreed to this statement.
However, 28.6% of the respondents also agreed while 21.4% strongly agreed. The
remaining 10.7% were uncertain. It therefore implies that a majority of the respondents
disagree that measures are put in place to ensure the minimization of deviations from laid
down rules concerning inventory control.
Moreover, the researcher also sought to find out whether the outfit of the staff ensures
that inventory is maintained at a level that is smooth and also doesnt hamper the
operation of end users. Fifty percent (50%) of the respondents indicated that they strongly
agree to this. A smaller percentage (2 percent) however strongly disagreed to this with 3.6
percent being uncertain. This shows that their outfit ensures that inventory is maintained
at a level that is smooth and also doesnt hamper the operation of end users. A majority of
the respondents also pointed out that they disagree to notion that the medical stores
maintain sufficient amount of end user required products to meet end user needs regular.
The results of the study also revealed that the medical stores do frequently experience the
incidence of obsolescence and out of date within stock. This stems from the fact the data
presented in the table above reveals that a majority of the respondents (39.3%) strongly
agreed to this. In addition, respondents were asked to present their views as to whether
the concept of outsourcing in the operation of the medical store is very important. The
results after the analysis of the data reveals that a majority of the respondents strongly
agreed that it is of great importance as shown in table 4.3 above.

66

It was found out that the medical stores employ the use of vendor managed inventory
(VMI) systems as 42.9% which is the greater percentage of the respondents agreed to
this. Moreover, 46.4% also indicated that they are satisfied with the operations of the
vendor managed inventory systems by indicating that they agree whiles 10.7 percent also
strongly disagreed.
On the issue of efficiency of suppliers in the execution of the contracts won being
satisfactory, most of the respondents (28.6%) indicated that their efficiency is satisfactory
by indicating that they agree to this assertion while 14.3 percent also disagreed. Fifty (50)
percent of the respondents also pointed out that the patronage of service of the regional
medical stores is very satisfactory.
The study also looked at the functionality of the IT-based management solutions, on
which 35.7% of the respondents indicated that its functionality is not satisfactory by
indicating that they disagree to item 14 of the table above.
Moreover, most of the respondents involved in the study indicated that they are very
satisfied with the number of suppliers transacting business with the medical stores. This
is revealed in table 4.3 above, which shows that 53.6 percent of the respondents agreed to
this assertion. A majority of them (35.7 percent) also indicated that their outfit frequently
experiences suppliers failure to deliver with the expected time frames.
Moreover, in addition to ensuring that inventory are kept within the right levels to ensure
that the medical stores dont run out of essential requirements, the study also tried to
generate responses from the respondents on how often the medical stores encounter
shortage of commodities at the medical stores. The following are some of the responses
that were given by the respondents involved in the study:

67

1.

The rate shortages occur is dependent on the month of the year as there are
shortages in January, May and June but no shortages in March and April.

2.

Shortages do not occur regularly but sometimes occur for a period of about two to
three months.

3.

Shortages occur most of the time but it all depends on the kind of commodity
being requested much.

In addition, the researcher also looked at some of the consequences of these shortages on
health delivery at the hospital where the respondents gave answers including these below:
1.

We (supplies) are not able to serve our patients as expected of us.

2.

Safe and effective therapies are substituted with alternative treatments.

3.

It leads to a decline in the revenue generated by the various regional medical

stores.

The above elicited responses therefore point out that shortages at the regional medical
stores have an adverse effect on health care delivery in the region as it leads to negative
consequences on both the customers or clients and the medical stores as well.

4.4.2 Measures put in place to ensure good Inventory practices.

The researcher also sought to find out whether enough measures are put in place to
ensure good inventory practices. The respondents were therefore asked to indicate
whether they would grade the measures put in place to ensure good inventory practices as
excellent. The findings of this aspect of the study are presented below.

68

Evaluation of Inventory Measures

Evaluation of Inventory Measures

Strongly Agree

Agree

Uncertain

Disagree

Strongly disagree

Figure 4-5 Inventory Measures in Place

Source, Field survey 2013

Figure 4.5 above reveals that a greater percentage (42.9%) of the respondents indicated
that they strongly agree to the notion that excellent measures are put in place to ensure
good inventory practices. 17.9% on the other hand also agreed to this same assertion.

69

25% disagreed whiles 10.7% strongly disagreed. The remaining 3.6% were however
uncertain.
It can therefore be assumed that the measures put in place at the various medical stores
ensure good inventory practices since a majority of the respondents strongly agreed to
item 9 of the staff questionnaires as shown in figure 4.5 above.

4.4.3 IT-based Inventory Management solutions

The use of IT-based Inventory Management solutions

Strongly Agree

Agree

Uncertain

Figure 4-6 IT - Based Inventory Management Solutions

Source, Field survey 2013

70

Disagree

Strongly disagree

From the figure 4.5 above, it can be seen that 39.2% of the respondents strongly
disagreed that IT-based Inventory Management solutions are used by the various medical
stores while 14.3% strongly agreed on this same issue. However, 21.4% agreed whiles
out of the remaining 21.4%, 17.9% disagreed with the remaining 7.1% remaining
uncertain as to whether IT-based Inventory Management solutions are used. The analysis
of the data above therefore reveals that the use of IT in the various medical stores is not
encouraging as a greater number of them disagreed to the presence of IT-based Inventory
Management solutions. In the Researchers view however, the use of IT-based Inventory
Management solutions will increase efficiency thereby improving health care delivery in
the long run. Its absence therefore creates a dent in health care delivery in the region.

71

4.4.4 Basis for Keeping Inventory at the Required Levels in the

Medical Stores

Precautionary Motive; 18%

Continuous Supplies; 25%

Transaction Motive; 4%

Inventory Control; 54%

Figure 4-7 Basis for keeping inventory within level

Source, Field survey 2013

As part of the objectives, the study sought to find out the basis for keeping inventory at
the required levels in the medical stores. It was found that inventory control forms the
major reason (53%) for keeping inventory at the required level at the medical stores.
Also, 25% indicated that inventory is kept at the required level at the medical stores to
ensure continues supply while 18% and 4% respectively precautionary motive and
transitive motive are the basis for keeping inventory at the required levels at the medical

72

stores. It is therefore clear from the analysis of the data above that inventory control
forms the basis for keeping inventory at the require levels in the medical stores.

4.4.5 The Efficiency of Suppliers and Other Stakeholders in the

Inventory Management Process
The researcher also sought to find out how efficient the various suppliers and
stakeholders in the inventory management process are. Questions were therefore
provided in the questionnaires for both the suppliers and staff to help ascertain this. The
results obtained after the analysis of the data from the questionnaire are presented in the
following tables and graphs.
Item 5 of the staff questionnaire covered the efficiency of suppliers in their participation
of the procurement process of the regional medical stores. The findings are presented in
figure 4.8 below.

73

Efficiency of Suppliers

Figure 4-8 Efficiency of Suppliers

Source, Field survey 2013

Fig 4.7 shows that 39.3% of the total number of suppliers sampled is of the view that the
efficiency of suppliers in the participation of the procurement process of the regional
medical stores is low. 21.4% see the suppliers to be of high efficiency, 17.9% of very low
efficiency and 14.3% as of very high efficiency. The remaining 7.1% however indicated
that they are uncertain of their efficiency. The data from the results therefore reveals that
a majority of the respondents agree that the suppliers are of low efficiency in respect of
participating in the procurement process of the regional medical stores. Only a small
percentage of the respondents pointed out that the suppliers are of a very high efficiency.
It can therefore be concluded that the efficiency of suppliers in the participation of the
procurement process of the regional medical stores is low. Also the respondents pointed
out that most suppliers who have been awarded contracts process are efficient in their

74

delivery and always make sure goods are delivered in the right quantities. Others also
revealed that the suppliers should be given effective guidelines on the procurement
process to improve upon their effiecncy.
In addition the researcher sought to find out the level of efficiency of the employees of
the regional medical stores. The findings revealed that a majority of the respondents
(45%) agreed that the efficiency of the employees is high while a minority of them were
of the view that the employees of the regional medical stores were of low efficiency.
The respondents were asked a question on how they assess the level of efficiency of
employees of the regional medical stores and the responses given include these below:
1.

The major stakeholders are very professional and they exhibit very high levels of
competence and expertise.

2.

The workers at the regional medical stores are very efficient and hardworking
people.

3.

The employees are dedicated to their work.

4.

They are generally efficient.

The responses given therefore highlight the idea that the level of efficiency of employees
at the regional medical stores is very high and this will help improve upon the delivery of
health care in the region.
However, the researcher went on to find out about the financial practices of the various
medical stores in the Ashanti Region. The results were quite interesting. A greater
percentage of both the suppliers and the staff revealed that the operations of the medical
stores were done in such a way that they did not keep their expenditures within the

75

budget authorization. The respondents were asked to indicate whether they strongly
agree, agree, disagree, are uncertain or strongly disagree to item 7 of the staff
questionnaire. The results after the analysis of the data from the questionnaire is
presented in the table figure 4.9 below

Good Expenditure Practices

14
12
10
Good Expenditure Practices

8
6
4
2
0

Strongly Agree

Agree

Uncertain

Disagree

Strongly disagree

Figure 4-9 Expenditure and Budget Authorization of Medical Stores

Source, Field survey 2013

From the graph above, it is seen that 7.1% of the respondents indicated that they are
uncertain about the practices of the Medical stores in terms of their expenditure.
However, a majority of them (35.7%) pointed out that the practices of the medical stores
in terms of expenditures were not within the budget authorization by indicating that they
disagree to the item 7 on the staff questionnaire which touched on the expenditures of

76

these medical stores in the region. Moreover, 20% of the selected respondents revealed
that they strongly agree to this assertion. 21% on the other hand strongly agreed.

4.4.6 Challenges and Prospects of an Efficient Inventory

Management Department at the Ashanti Regional Medical
Stores.
The purpose of this part of the study was to find out the various challenges facing the
various medical stores which hinder their success in inventory management and health
care delivery. The researcher also sought to find the prospect for efficient Inventory
Management in the Ashanti region. On the questionnaire for the staff, respondents were
asked to state some of the challenges of the regional medical store in terms of managing
inventory. The respondents gave various challenges including these stated below:
1.

Inadequate funds to support Inventory Management practices

2.

Inadequate infrastructure and hence lack of space in the storehouse.

3.

Lack of cooperation on the part of leaders.

4.

Some of the drugs are not requested as anticipated and this afects the
management of inventory at the medical store greatly.

5.

The recent power failures in the country serve as a major challenge to

inventory management at the regional medical store.

This stands to reason that the above challenges will militate against the
success of the delivery of health care in the Ashanti Region to a greater
extent. This stems from the fact that, from the researchers view, financial
support, adequate and suitable infrastructure and above all cooperation from

77

the employees as well as the leaders of an organization are among the

numerous factors which promote the success of organizations.
In addition the researcher went on to find out about the level of
professionalism in the regional medical stores. The figure below presents the
findings from the data collected.

4.4.7 Professionalism at the Regional Medical Store

Professionalism at the Regional Medical Store

Very satisfied

Satisfied

Good

Dissatisfied

Very Dissatisfied

Figure 4-10 Professionalism at the Regional Medical Store

Source, Field survey 2013

From the figure above it can be observed that 6.2% representing the minority are very
dissatisfied and 20.6% are dissatisfied with the professionalism at the regional medical
store. However, 33% see the professionalism as good, 21.6% are also satisfied and the
78

remaining 19% are very satisfied with the professionalism at the regional medical store.
From the data above, even though 33% of the respondents consider the professionalism at
the regional medical store to be good, a large percentage (20.6%) are dissatisfied and this
is not good enough to ensure the smooth delivery of health care in the region. The level
of professionalism therefore finds itself as a challenge to the administration of health care
in the region.

4.4.8 Processes and Procedures at the Regional Medical Stores

This aspect of the study was aimed at finding out the efficiency of processes and
procedures at the Regional Medical Stores. Connor (1998) points out that a reengineering methodology seeks to optimize the combination of work processes,
organizational structure, systems, technology and incentives that maximize value
provided to the customer and minimize associated cost. The researcher therefore tried to
find out the efficiency of the processes and procedures in the medical stores and ascertain
how these affect health care delivery in the region. The respondents were asked whether
they were satisfied with the processes and procedures at the regional medical stores. In
response to this question, majority of the respondents (46.4%) indicated that they were
dissatisfied with the processes and procedures at the regional medical store. 6.2% which
is the minority also pointed out that they were very satisfied with the processes and
procedures of the medical stores. The data is presented in the diagram below:

79

Processes and Procedures at the Regional Medical Stores

Very Satisfied

Satisfied

dissatisfied

very dissatisfied

Figure 4-11 Process & Procedures at the Regional Medical Stores

Source, Field survey 2013

It is clear from fig 4.10 above that a majority of the respondents (49%) showed that they
are dissatisfied with the processes and procedures in the regional medical stores, 26.8%
indicated they were satisfied. Out of the remaining 26.8%, 20.6% pointed out that they
are very dissatisfied while the remaining 6.2% (minority) also indicated that they are very
satisfied with the processes and procedures at the regional medical stores. The results
from the data therefore unearths the observation that the processes and procedures at the
regional Medical stores are not undertaken efficiently as a majority of the respondents
indicated that they are dissatisfied with these processes and procedures. This therefore
serves as a challenge to Efficient Inventory Management in the Ashanti Regional Medical
Stores.

80

Moreover, the respondents were asked to give responses in relation to how the medical
stores can explore new prospects to realize the achievement of maximum targets in
operations. The responses given include the following:
1.

Involving suppliers right at the initial stages and also sourcing for new suppliers.

2.

Making reviews of operations of the medical store in relation to previous

achievements so as to explore and apply new developments that may add greater
achievements.

3.

Provision of education and training for workers on inventory management to help

improve upon their operations.

In the view of the researcher, if these points stated above are strictly adhered to by the
various regional medical stores, delivery of health care in the region will be improved
significantly.

81

Chapter 5

- Summary of Findings,

Recommendations and Conclusion

5.1 Summary of Findings
This chapter finalizes the whole research process, gives a summary of the findings,
recommendations and conclusion (s). From all the responses gathered from the fieldwork,
the researcher can summarize the following:
5.1.1 Inventory Management Practices at the Ashanti Regional
Medical Stores
The results from the evaluation of the Inventory management practices in the Ashanti
Regional Medical Stores were quite interesting. A majority of the respondents (50%)
agreed that their inventories are kept within the right levels to ensure that the medical
stores doesnt run out of essential requirements, 35.7% which is the greater percentage
also strongly agreed that much importance is attached to ensuring that their products
serve their use within their product life cycle. This points out the medical stores do not
ensure that they do not run out of essential requirements, they also attach much
importance to ensuring that these products serve their use and this greatly affects the
delivery of healthcare in the Ashanti Region.
Moreover, 57.1% of the respondents strongly agreed that enough efforts and planning are
put into ensuring that the right quantities are purchased in accordance with the needs of
the end users. However, the results from the practices of the medical stores in relation to
their expenditures revealed that the operations of the medical stores are such that they do
not keep their expenditures within the budget authorization as 35.7% of the respondents
82

representing the majority asserted to this by indicating that they disagree to item 7 of the
staff questionnaire. This therefore brings to light, the fact that even though much effort is
put into ensuring that the right quantities of goods are purchased in accordance with the
needs of the end users, the issues in relation to the control of their expenditures within the
budget authorization are neglected and this goes a long way to influence the delivery of
medical care in the region negatively. Also, the analysis of the data therefore revealed that
the use of IT in the various medical stores is not encouraging as a greater number of them
(39.2%) disagreed to the presence of IT-based Inventory Management solutions.
Also, a greater percentage of the respondents (42.9%) indicated that they strongly agree
to the notion that excellent measures are put in place to ensure good inventory practices.
This therefore brings up the notion that good measures are put in place at the various
medical stores to ensure good inventory practices and this is helpful to health care
delivery in the region.
In addition, 32.1% which is the majority also disagreed that they are satisfied with the
level of adherence with the control measures put in place at the medical stores to ensure
the minimization of deviations from laid down rules concerning inventory control. Even
though 28.6% of them agreed to this notion, it can still be concluded that most of the
respondents are not satisfied with the level of adherence with the control measures put in
place at the medical stores.

83

5.1.2 The Efficiency of Suppliers and Other Stakeholders in the

Inventory Management Process
The study looked at the efficiency of both suppliers and employees as well as other
stakeholders of the various medical stores in the Ashanti region and came out with some
relevant findings that can be said to affect the delivery of healthcare in the region.
On the issue of efficiency of suppliers, 39.3% of the respondents view the suppliers to be
of low efficiency while 21.4% on the other hand see the suppliers to be of high efficiency.
In sum therefore, the study has revealed that the efficiency of the suppliers of the various
medical stores are low.
Also on the question of efficiency of the employees, a majority of the respondents (50%)
agreed that the efficiency of the employees is high which is very helpful to the delivery of
healthcare in the Ashanti Region.
The study also revealed that the operations of the medical stores were done in such a way
that they did not keep their expenditures within the budget authorization. 42.9%,
representing the majority of the respondents disagreed that their operations are within the
budget authorization.

84

5.1.3 Challenges and Prospects of an Efficient Inventory

Management Department at the Ashanti Regional Medical
Stores
The study has in process of the research brought to light some challenges in the Inventory
Management practices in the Ashanti Region that militate against the smooth delivery of
health care in the Region.
The research revealed that such factors inadequate funds support Inventory Management
practices, inadequate infrastructure and lack of cooperation on the part of leaders are
among the numerous factors which find themselves as challenges to Inventory
Management and largely, healthcare delivery in the Ashanti Region.
Also on the issue of professionalism in the various medical stores, the results from the
study showed that the employees have enough experience and are of high professionalism
as a greater portion of the respondents in the study agreed that they are satisfied with the
professionalism in the Regional Medical store. 33% saw the professionalism to be good
while 21.6% also indicated that they are satisfied with the professionalism in the regional
medical stores as against a minority of 21.6% who are dissatisfied and 6.2% who are very
dissatisfied.
In the view of the researcher, the level of professionalism in the medical stores provides
prospects for future improvements and expansions in the inventory management practices
as well as healthcare delivery in the region. This is based on the fact that the study has
revealed that the employees are of high professionalism leading to increased efficiency.

85

In addition the research also revealed that the conduct of the various processes and
procedures in the Medical stores served as a challenge to Inventory Management in the
Region. 46.2% of the respondents indicated that they were dissatisfied with the processes
and procedures at the regional medical store. This therefore the manner in which
processes and procedures are conducted in the various medical stores and institutions are
very poor and this can negatively affect the delivery of healthcare in the region

5.2 Recommendations
Based on the findings of this research, the researcher recommends the following:
1.

Measures must be put in place to ensure that both the staff and suppliers adhere to
the control measures put in place at the medical stores to ensure the minimization
of deviations from laid down rules concerning inventory control.

2.

The suppliers must be given enough training and education to keep them up to
date on new methods of carrying out their tasks in order to improve their
efficiency.

3.

The government, public as well as NGOs should be encouraged to support the

activities of Medical stores in the Region in the implementation of Inventory
management. This will ensure that these institutions are provided with the
necessary funds, infrastructure and equipment needed for their operations.

4.

Lastly these institutions must be monitored in order to help them keep their
expenditures within the budget authorization so as to improve upon the delivery
of health care delivery within the region.

86

5.3 Conclusion
The following conclusions can be drawn based on the finding of the research:
The various Medical stores engage in some inventory management practices, which are
helpful to the delivery of health care in the region; they also pay much attention to other
areas such as managing their expenses and making sure that their products serve their
use.
Also, the efficiency of the employees of the various medical stores appear to be high but
that of the suppliers however tend to be low, influencing the delivery of health care in the
region negatively.
Lastly there is high professionalism among the employees of the regional medical stores,
which provides prospects of an efficient inventory management practice in the region.
With the provision of some needs like infrastructure and funds coupled with the
elimination of challenges such as the poor conduct of the various processes and
procedures in the medical stores, the delivery of health care will reach its best in the
region.

87

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Appendix 1 Questionnaire for Staff

93

KWAME NKRUMAH UNIVERSITY OF SCIENCE AND TECHNOLOGY,

KUMASI
SCHOOL OF BUSINESS
DEPARTMENT OF LOGISTICS & SUPPLY CHAIN MANAGEMENT
QUESTIONNAIRE ON THE EFFECTS OF INVENTORY MANAGEMENT PRACTICES
ON HEALTH CARE DELIVERY; A CASE STUDY OF ASHANTI REGIONAL MEDICAL
STORES

This survey is meant to gather relevant information from management and staff of the
Ashanti Regional Medical [RMS] to enable the researcher to do an assessment of the
effects of inventory management practices on health care delivery in Ghana. The
information required for this exercise is strictly for academic purpose and any
information provided would be treated with utmost confidentiality and shall be used only
for the intended purpose. Your candid opinion is highly solicited.
Please I would appreciate it if you could spend some few minutes answering this
questionnaire. Thank you.
1.

How long have you been in employment with the Regional Medical Store?
Below 1 year

[]

1-2 years

[]

3 4 years

[]

4 5 years []

2 3 years

[]

2.

Educational Qualification/background

94

5 years and above []

SSCE

[]

HND

[]

1st Degree

[]

2nd

Degree

[]

Using the scale (1 5) below please indicate your approval/disapproval of the statements
that follows.
Strongly Agree
Agree
Undecided
Disagree
Strongly
Disagree
1
2
3
4
5
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16

Inventory is kept within the right levels to ensure that the medical store
dont run out of essential requirements
Effort and planning is put into ensuring that the right quantities are
purchased in accordance with the needs of the end users
Much importance is attached to ensuring products serve their use within
their product life cycle
Your outfit ensure that inventory is maintained at a level that is smooth
and also doesnt hamper the operation of end users.
The medical store maintain sufficient amount of end user required
products to meet end user needs regular
The medical stores frequently experience the incidence of obsolescence
and out of date within stock
The operations of the medical stores are such that it keeps its expenditures
within the budget authorization
You are satisfied with the level of adherence with the control measures
put in place at the medical stores to ensure the minimization of deviations
from laid down rules concerning inventory control
You would grade the level of the measures that are in place to ensure
good inventory practices as excellent
The concept of outsourcing in the operation of the medical store is very
important
You are very satisfied with the services rendered by outsourced service
providers at the medical stores
The medical stores employs the use of vendor managed inventory [VMI]
systems
You are satisfied with the operations of the vendor managed inventory
systems
The medical stores employs the use of IT based inventory management
solutions
The level of efficiency of suppliers in the execution of the contracts won
are very satisfactory
The patronage of the services of the regional medical stores is very
satisfactory

95

17
18
19

3.

You are satisfied with the functionality of the IT based inventory

management solutions
You are very satisfied with the number of suppliers transacting business
with the medical stores
Your outfit frequently experience suppliers failure to deliver with the
expected time frames

What forms the basis for keeping inventory at the required levels in the
medical stores?

4.

Precautionary Motive []

Transaction Motive

[]

Inventory Control

[]

Continuous Supplies []

Speculation Motive

[]

How does suppliers in the logistic chain of the regional medical stores
afect the operations of the department?
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

5.

What is your opinion on the level of efficiency of these suppliers in

their participation of the procurement process of the regional medical
stores?
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

96

6.

What is your opinion of the functionality and its impact of the other
stakeholders on the operations regional of the regional medical stores?
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

7.

How would the regional medical store explore new prospects to realize
the achievement of maximum target in its operations?
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

8.

How do you assess the level of participation of customers/clients of the

regional medical store in the inventory management process?

----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------9.

What are some of the major challenges of the regional medical store in
terms of managing inventory?
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

10.

Any other comment(s)?

97

----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Appendix 2 Questionnaire for suppliers

98

KWAME NKRUMAH UNIVERSITY OF SCIENCE AND TECHNOLOGY,

KUMASI
SCHOOL OF BUSINESS
DEPARTMENT OF LOGISTICS & SUPPLY CHAIN MANAGEMENT

99

QUESTIONNAIRE ON THE EFFECTS OF INVENTORY MANAGEMENT PRACTICES

ON HEALTH CARE DELIVERY; A CASE STUDY OF ASHANTI REGIONAL MEDICAL
STORES

This survey is meant to gather relevant information from suppliers of the Ashanti
Regional Medical [RMS] to enable the researcher to do an assessment of the effects of
inventory management practices on health care delivery in Ghana. The information
required for this exercise is strictly for academic purpose and any information provided
would be treated with utmost confidentiality and shall be used only for the intended
purpose. Your candid opinion is highly solicited.
Please I would appreciate it if you could spend some few minutes answering this
questionnaire. Thank you.
11.

Gender:

12.

How old are you?

13.

14.

Male []

Female []

Below 25

[]

25 30

[]

41 45

[]

Above 40

[]

31 35

[]

36 40 []

How long have you been a supplier for the regional medical stores?
Below 1 year

[]

1-2 years

[]

3 4 years

[]

4 5 years []

2 3 years []
5 years and above []

Educational Qualification/background
SSCE

[]

HND []

1st Degree

100

[]

2nd Degree

[]

15.

From your views, how important is your services to the regional medical store?
Very Important

[]

Of Little Importance []
16.
17.

Important

[]

Moderately Important []

Unimportant []

Are you satisfied with the level of professionalism at the regional medical store?
Very satisfied
[]
Satisfied
[]
Good
[]
Dissatisfied
[]
Very Dissatisfied
[]
Do you experience a lot of variation in the execution of contracts awarded to you
by the regional medical stores?
Very Frequently

[]

Frequently

[]

Rarely

[]

Never

[]

Occasionally []

18.

Are you satisfied with the level of adherence to guidelines of contract awarded to

19.

you by the procurement department?

Very satisfied
[]
Satisfied
[]
Good
[]
Dissatisfied
[]
Very Dissatisfied
[]
How satisfied are you in terms of processes and procedures at the regional

20.

medical stores?
Very satisfied
[]
Satisfied
[]
Good
[]
Dissatisfied
[]
Very Dissatisfied
[]
How do you assess the level of efficiency of employees of the regional medical
stores?
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

21.

Any comments on improving relationships between the regional medical store and
its suppliers?
-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

101

22.

----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Any other comment(s)

-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

102