Evaluation and Program Planning 80 (2020) 101801

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Evaluation and Program Planning

journal homepage: www.elsevier.com/locate/evalprogplan

Logistics reorganization and management of the ambulatory pharmacy of a T

local health unit in Portugal
Catarina Castroa, Teresa Pereiraa,b, J.C. Sáb,c, Gilberto Santosd,*
a
School of Engineering of Porto (ISEP), Polytechnic of Porto, 4200-072 Porto, Portugal
b
Centre for Research & Development in Mechanical Engineering (CIDEM), School of Engineering of Porto (ISEP), Polytechnic of Porto, Porto, Portugal
c
School of Business Sciences, Polytechnic Institute of Viana Do Castelo (IPVC), Av. Pinto Da Mota, Valença 4930-600, Portugal
d
School of Design, Polytechnique Institute of Cavado and Ave (IPCA), Vila Frescaínha S. Martinho, Barcelos 4750-810, Portugal

A R T I C LE I N FO A B S T R A C T

Keywords: The Hospital Pharmacy of a Local Health Unit (LHU) in greater Oporto plays a major role in the community. In
Hospital ambulatory pharmacy addition to providing medicines to the entire Internal Unit, it has created a service called "Hospital Ambulatory
Inventory management Pharmacy", which allows continued hospital treatments at home, in a more comfortable and familiar environ-
Advanced warehouse ment. This is mostly due uderfunding which has hindered recruitment of health professionals as well a growing
Replenishment by levels
concern for the comfort of patients as they convalesce. The Hospital Ambulatory Pharmacy’s main problems are
both recurring stock-outs and over-stocks; the fact that medicines’s delivery routes are not completed, and that
medical staff lacks awareness of the techniques to overcome the logistic issues involved. As a methodology, a
context analysis was carried out, KPI's were created to quantify the problems and raise health professionals’
awareness of what was happening. Solutions for storage were analysed and visits were made to a central hospital
to analyse the solutions adopted to solve the same problems. The most appropriate inventory management
policies were considered for the organization of existing and further resources. We chose to create an Advanced
Warehouse with Level Replenishment. The levels were defined considering the demand of each medicine and
divided into three different classes to use the best strategy for each type of demand. Then, and with the help of
the LHU IT team, the inventory management module of the information system was parameterized, so stock
replenishment could be done electronically. All these changes resulted in a 30 % reduction in stock-out. At the
beginning of the study, stock-outs would reach peaks of 6 %. These were reduced to 4.5 % at a point at which
professionals were already more aware of the logistic problem, and finally to 1.5 %, in the final phase, at a time
when the proposal had already been implemented. Over-stock was reduced by 66 %. Delivery routes were
stipulated, and compliance was verified. A novel service developed to increase the well-being of patients
monitored at home which it is intended to improve the service provided to the users and at the same time reduce
operational costs.
As a contribution to the knowledge, in addition to the case study presented to be a novelty in terms of
scientific articles published because it is a service implemented in the distribution of medications to patients at
home, mostly with oncologic diseases. Several methods from Lean Thinking were used, such as, Kanban System
and Advanced Warehouse for inventory management levelling and optimization techniques, as well as, opera-
tional KPIs, with the purpose to reach out the improvement of program planning and evaluation. This approach
resulted in some improvements, namely, the increase of the quality of the healthcare services for the population.
And, in terms to reduce stock and excess stock-outs, to reduce inventory costs, setting the delivery routes, raising
the entire medical team’s awareness of the problem and committing to optimization a reality.

1. Introdution monitored at home which it is intended to improve the service provided

to the users and at the same time reduce operational costs. It was done
This case study was developed in a Local Health Unit (LHU) in the in 2018 with a six-month duration.
greater Porto, more specifically in the ambulatory pharmacy (APh). A For some years now, the role of the industrial manager has ceased to
novel service developed to increase the well-being of patients focus only on the industrial and support services areas. This has been

⁎
Corresponding author.
E-mail address: [email protected] (G. Santos).

https://doi.org/10.1016/j.evalprogplan.2020.101801
Received 12 July 2019; Received in revised form 6 February 2020; Accepted 18 February 2020
Available online 19 February 2020
0149-7189/ © 2020 Elsevier Ltd. All rights reserved.
C. Castro, et al. Evaluation and Program Planning 80 (2020) 101801

increasing in importance in several areas, as is the case of the hospital warehouse until it reaches the warehouses of the specific health ser-
area. vices, also called “supermarkets”. Finally, the third cycle corresponds
In the case study of the LHU’s Ambulatory Pharmacy, patients are medicines leaving the supermarkets to the place of patient treatment,
sent to the hospital to receive their medicines, which, when stock-outs where finally the product is consumed.
occur, results in patient disssatisfaction and possible health deteriora- Normally, these cycles are controlled by different people. Being
tion. In Ambulatory Pharmacy most treatments should be done at a managed by several hospital managers leads to mismatched and, often
specific time, daily or on a given day. contradictory goals (Teixeira, 2012). While physicians are looking for
Firstly, to understand the inner workings of the study area, the products that are effective in treating patients, regardless of their cost,
concepts of hospital logistics and hospital pharmacy were described, for hospital managers aim to provide quality, effective products at the
purposes of distinction and comparison. Then, development began with lowest possible cost. Producers and suppliers, on the other hand, are
a detailed description of the pharmaceutical services in question, mainly concerned with gaining a competitive advantage (Costa, 2013).
namely the hospital ambulatory pharmacy. The processes and all the This mismatch is a problem that makes the operation far from smooth,
methods used were also analyzed. KPIs were defined from the very further intensifying the complexity of a hospital logistics network.
onset of the study to compare the initial and final situations. Having Considering these problems, Stank et al. (2017) emphasize the need for
defined the problems properly, and in accordance with the proposed a critical domain to understand the internal functioning within key
objectives, the implementation proposal was presented. We began by relationships-what it is, why, and when it's-that lead to actual results.
analyzing all the medicines in circulation which culminated in a dis- Moreover, the raise in healthcare expenditure has prompted growing
tribution by classes, according to their demand. For each class, an in- pressures to improve efficiency in the healthcare industry. The net-
ventory management strategy was applied, which was expected to solve work’s complexity is futhered by the different storage points in ex-
all the problems. At the end, the results were analysed and presented. istence, with various functions such as: planning, organisation and
The paper is divided into four sections. The first corresponds to this purchase control activities, movement and storage of materials and all
Introduction. Section 2 reviews the literature concerning hospital lo- the flow of information from these processes (Ballou, 2007).
gistics and inventory management systems. Section 3 refers to the case Inventory management in the healthcare area should be balanced,
study developed at the LHU. Finally, in Section 4 the general results are as too much material or lack thereof can cause problems (Moons, Geert,
discussed, and conclusions drawn. & Liliane, 2018, 2019). If, on the one hand, over-stock results in high
From the Academia point of view, the contributions to healthcare costs of ownership and expired or obsolete medicine, on the other hand
public units, with strong financial restrictions, were huge, such as the stock-outs can cause treatment delays, aggravation of the patient's
application of methods from Industrial & Engineering Management, e.g. health or, worst, the patient’s demise (Vries, 2011).
the kaizen-Lean techniques, quantitative techniques, other new tech- Thusly, those responsible for the logistics of a hospital are expected
nologies (advanced warehouses, e-Kanban…). This approach resulted to ensure the correct distribution of the products, where and when they
in the improvement of productivity, increase of patient level service are needed, with the quality and quantity intended for the provision of
quality, in the reduction of costs and, the most valuable impact, the healthcare, avoiding stock-outs and ensuring that the whole process is
increase of the quality of the healthcare services for the population. carried out in the most effective and efficient way (Aguilar & Vegas,
The main goal in developing the project was to increase the effi- 2012). They also need to continually look for opportunities to improve
ciency of Hospital Ambulatory Pharmacy, by meeting several specific logistic processes to reduce costs and improve customer service. Mea-
objectives, namely, awareness of health professionals of the need for suring supply chain performance is thus imperative to identify and
change; creation of KPIs; reduction of existing stocks, reduction of correct deficiencies in logistics (Moons et al., 2018).
stock-outs and route standardisation, with the purpose to reach out the Although sharing the same basis, the hospital pharmacy differs from
improvement of program planning and evaluation. For this, based on hospital logistics because it requires a greater attention to the terms and
the analysis and measure of the process with the involvement of the conditions of manipulation and storage of the products in circulation,
stakeholders, key performance indicators were defined, several since they are medicines, active substances for compounded medica-
methods from Lean Thinking were used, such as, Kanban system and tions and clinical material necessary to the treatment of the patient.
Advanced Warehouse for inventory management levelling and optimi- According to the Hospital Pharmacy Executive Council, hospital
zation techniques. pharmacies must be headed by hospital pharmacists who must ensure
the correct treatment of patients, the quality, efficiency and safety of
2. Literature review medicines and promote their teams’ integration in healthcare, scientific
research and teaching (Hospital Pharmacy Executive Council (CEFH),
Health services provided at home are becoming more important in 2005). They are responsible for everything related to the management
most European countries. A better understanding of the specificities of of medicines and other pharmaceuticals, such as medical devices and
home care (HC) operations and their management is therefore neces- reagents, implementation and monitoring of medicine policy, man-
sary (Sahin & Matt, 2015). According Stank, Pellathy, In, Mollenkopf agement of experimental medicines and administration and manage-
and Bell (2017), logistics has evolved from a description-based dis- ment of their budget (Hospital Pharmacy Executive Council (CEFH),
cipline to one based upon theoretical grounding from other business 2005).
disciplines to define, explain, and understand complex interrelation- The Hospital Pharmacy Manual defines medicine management as
ships, resulting in the identification of the discipline’s primary domain the set of procedures performed to ensure proper use and dispensing of
and major concepts—the “what’s” of logistics. Hence, the internal medicines in perfect conditions. This includes several stages such as
supply chain in hospitals is characterized by complexity, uniqueness selection, purchase and storage, followed by the distribution and ad-
and operational challenges (Moons, Waeyenbergh, & Pintelon, 2019), ministration of the medicines and other pharmaceutical products, as per
aligned with the external supply chain, suffering pressures for reach the rules, standards and principles defined in the referred Manual.
sustainability issues, that according to Carter and Washispack (2018) The main reason for the interest in optimisation issues within
should be studied. The operation of the Hospital supply chain system healthcare is the aging, general population and increased longevity in
can be better explained and characterized by three distinct cycles, most developed countries, which largely escalated costs for social and
Fig. 1. healthcare services (Rais, Alvelos, Figueiredo, & Nobre, 2016). Adop-
The first cycle includes the circuit of the products from the time they tion of new strategies and the use of some optimisation methodologies
leave the supplier until they arrive at the hospital and are stored. The proves promising for cost effectiveness. In the Netherlands, a case study
second cycle encompasses the moment the product leaves the main shows that a 20 % cost reduction is possible through optimisation of the

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C. Castro, et al. Evaluation and Program Planning 80 (2020) 101801

Fig. 1. Cycles of the hospital supply chain, (adapted from Volland et al., 2017).

flow of sterile instruments (Rais & Viana, 2010). logistics service on how its quality is defined and attributed. But in
In hospital logistics and hospital pharmacy there are several dif- recent years, both quality management practices (QMP) and knowledge
ferent methods that help in effective and efficient inventory manage- transfer (KT) have been studied extensively from inter-organisational
ment: the traditional method, such as, continuous review models based and intra-organisational perspectives (Hong, Zhang, & Mingxia Shi,
on the parameters reorder point and economical order point or peri- 2018). As such, logistics needs a quality service (Marques, Lopes,
odical review, with a fixe review period and an objective order level. Santos, Delgado, & Delgado, 2018; Santos & Milán, 2013), sustainably
The alternative method, based in the LEAN Thinking methods, such as, (Carvalho, Santos, & Gonçalves, 2018; Barbosa, Oliveira, & Santos,
the double box method, the car exchange system, both based on visual 2018), with a low service quality cost (Santos, Gomes et al., 2019;
management methods and levelling soyck system, the Kanban system, Santos, Murmura, & Bravi, 2019). The estimation of a cost function,
being the double box the most basic one, the replenishment method by including service variables, will yield estimates of the elasticity of cost
levels and the computerised and automated method. The latter (e.g. with respect to service quality (Johnston & Ozment, 2015). The cor-
automated warehousing, bar coding, RFID, etc.) has demonstrated the relation between credibility and the other information-quality variables
ability to help healthcare providers overcome the most challenging needs to be examined further to provide guidelines on back-tracking
inventory and distribution management barriers of product var- and managing informationquality deficiencies (Gustavsson & Jonsson,
iabilility, charge capture innacuracies, complicated workflows, etc. 2008). Any resistance to change is overcome by enough information
(Moons et al., 2019), and that initial investment for implementing such and contribution to change. The economica activities are going through
systems though high is well worthwhile for its return in the long run an important time, in which breaking barriers and globalization re-
(Isken & Littig, 2002). Nevertheless, and despite a visible decrease over inforce the quality as an essential corporate change agent of our time. A
the years, these IT’s costs are still too high for most state funded LHU, quality management system implemented effectively contributes to
thus the popularity of Lean Tools in healthcare, either on their own or achieving competitiveness in organizations (Araújo, Santos, & Costa Sá,
in combination with bar coding or RFID, for example. 2019; Batista & Santos, 2015; Bravi, Murmura, & Santos, 2019; Costa,
Herdeiro and Moraia (2010) say that hospital logistics was devel- Barbosa, Santos, & Alves, 2019; Godeiro, Dantas, & Cyreneu, 2019;
oped with the application of Lean Tools, developed for industrial set- Santos, Rebelo, & Santos, 2017), it promotes innovation and it helps to
tings. Although the purpose of the tools may be the same, it needs some create added value (Santos, Gomes et al., 2019; Santos, Murmura et al.,
adaptation. For example, in the industry stock-outs result in loss of 2019).
profit but, in the hospital, it could be the loss of a life. In hospital lo- Teixeira (2012) and Costa (2013) developed studies in hospital
gistic the goal is zero stock-outs or delays, but also zero over-stock of settings, using the concept of Advanced Warehouse with Replenishment
any resource. Thus, the basis of the Lean House has the same guiding by Levels. According to Teixeira (2012), the main advantages of ap-
principles (GEMBA, MUDA, KAIZEN), but an added emphasis on change plying this method is the reduction of stock costs and the reduction of
management (Oliveira, Sá, & Fernandes, 2017; Sá & Oliveira, 2013). stock-outs. According to the author, the greatest difficulty has been to
The “Logistics excellence” is the roof of the house, and the two pillars raise the healthcare providers’awareness of the importance of inventory
are continuous improvement and innovation (Herdeiro & Moraia, management. Costa (2013) also pointed out the same advantages but,
2010). According Tanga et al. (2019), Quality Assurance (QA) of that the application of this method can lead to differences between the
pharmaceutical warehouses is a critical issue for formulating working stock in the computer system and the physical stock, as some of the
instructions in accord with many regulations. The continuous im- medicines consumed may go unrecorded. This can be solved by digi-
provement requires workers to develop critical thinking about their talising the process using IT devices to read bar or QR codes, but in-
activity and study new effective methods of execution (based on visual vestment is high, as said, and training is needed. Nevertheless, both
management so that changes are easily noticed) (Santos et al., 2014; authors refer that the concept studied has mostly positive results, sol-
Santos, Afonseca, Murmura, Félix, & Lopes, 2018). Process innovation ving most of the problems. Rais et al. (2016) designed, developed, and
implies changes in all agents involved in the process: suppliers, ware- installed a software incorporating a heuristic method and implemented
houses, customers, healthcare providers and patients. According Thai it to solve an optimisation model that is now an important decision-
(2013), some years ago, there has been very little research done in support system at the logistics department of the hospital, where the

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C. Castro, et al. Evaluation and Program Planning 80 (2020) 101801

performance improvement translated into resource reduction by 16.66 Usually the pharmacy works with pathologies that require greater
%. control and, there patients are always tended to by licenced pharma-
The application of inventory management methods plays an im- cists who provide them with all the necessary information about the
portant role in industry and in logistics services (Stecca et al., 2016). medicine as well as control medicine intake and any side effects.
Similarly, patient care processes in hospitals are supported by a range of Pathologies may range from oncological diseases, infectious diseases,
operational activities including inventory management and distribution chronic kidney diseases, to autoimmune diseases among many others.
of supplies to point-of-care locations (Moons et al., 2018). Hence, This service has been located since July 2015 in a 28m2 room, of
hospital materials management has been identified as one key cost which 11m2 are for storage. From the onset of this operation, inventory
containment lever to cope with steadily increasing healthcare costs in management is controlled through the Kanban system.
industrialised countries (Kelle, Woosley, & Schneider, 2012; van der In this system, the card is placed when the order point limit is
Laan, van Dalen, Rohrmoser, & Simpson, 2016). This is highlighted by reached. When the pharmacist withdraws the last medicine, he/she
Moons et al. (2019) saying that hospitals carry large amounts and a must also remove the card. This card is sent to the Pharmaceutical
great variety of goods, and the issues of storing and distributing these Services, where the purchase order is then made to the Purchasing
throughout the hospital supply chain are of great importance to pro- service, which then places the order. This system follows an ongoing
viding high-quality patient service, inasmuch as logistics encompasses review in which the quantity to be ordered is fixed, but the ordering
the process of handling physical goods, e.g., pharmaceuticals, surgical period is variable.
medical products, medical devices, etc. Stecca et al. (2016) examined For medicines stocked in the hospital pharmacy services, inventory
the optimisation of a hospital’s inventory costs whereby the central management is done through a transfer request made via the internal
pharmacy of the hospital assumes a role of central decision maker for software. In this database there is an ideal amount stipulated, i.e. the
purchasing and distributing medicines to internal wards. Despite the reorder point, and whenever this point is reached, a new order must be
awareness that inventory management is crucial in a hospital, this task placed.
is often neglected, with problems that are mostly caused by over-stocks For hospital medicine Kanban, when the requested medicine arrives
or stock-outs. With an efficient hospital inventory management, it is at LHU it enters the Pharmacy service by the reception, where it is then
possible to improve patient service, expedite treatments and avoid, in a stored for the Ambulatory Pharmacy in a dedicated area. It is important
worst-case scenario, the death of the patient. This can be achieved not to note that medicines that require refrigeration are kept in cold sto-
only by using the best practices in hospital inventory management but rage.
mostly by cross‐functional integration (CFI) of logistics (Frankel & The Operational Assistant (OA) transports the APh medicines on
Mollenkopf, 2015). two routes: one in the morning and another late in the afternoon.
In recent years several authors (Kelle et al., 2012; Volland, Fügener, Medicines are stored upon arrival. However, they have already been
Schoenfelder, & Brunner, 2017) have contributed with literature review transferred electronically from Pharmacy Services to the APh.
concerning the state-of-the-art in hospital logistics, and in related areas
such as pharmaceutical distribution and transportation. Volland et al. 3.1. Solutions found and fine tuning
(2017) analised the state-of-the-art of research on inventory manage-
ment in hospitals, with a focus on the application of quantitative To be able to perform quantitative analysis of the operation and
methods. later to investigate the issues raised by operating the ambulatory
They categorized the literature into four streams, i.e., (1) Supply pharmacy, several daily KPIs were defined: patients tended to, new
and procurement, (2) Inventory management, (3) Distribution and patients, stock-outs, kanbans sent to order, Kanbans updated and time
scheduling, and (4) Holistic supply chain management. They realised of departure from the OA to APh. These KPIs were also used to ensure
that the use of optimisation techniques is constantly gaining im- that the process was monitored throughout, also after the im-
portance. Optimisation has been successfully applied in research plementation of improvements.
streams (1), (2), and (3). The most important problem to deal with is APh stock-outs. When
Kelle et al. (2012) discuss the pharmacy supply chain and current this happens in industry, albeit worrying, it is solved eventually, and in
managerial practices in the case of a hospital, in an individual Care Unit the worst-case scenario a customer may be lost to a competitor. In an
(CU). They examine the often, conflicting goals in decision making APh operation, it is a patient whose health may worsen or die.
amongst the various stakeholders, and explore the managerial tradeoffs Stock-outs occur because of other factors which impact the man-
present at the operational, tactical, and strategic levels of decision agement and the APh operation: inefficient inventory management;
making. Furthermore, they suggest the Reorder Point and Order Up to lack of concern for and outdated Kanban cards, non-compliance with
Level that control the automated ordering system for the operational medicine delivery routes and prioritisation of patient care.
inventory management. These parameters are based on a near-optimal Several variations are observed in Fig. 2 regarding the relationship
allocation policy of cycle stock and Safety Stock under storage space between the number of stock-outs and the number of patients serviced
constraint. Steeca et al. (2016) proposed inventory control strategies daily. Some days present record-high stock-outs, others present a lower
integrating combinatorial based mechanisms and classical inventory number of stock-outs and, however rare, some days present zero stock-
control to optimise inventory costs of medication logistics. outs. Stock-outs peak at 6% of patients, which is a serious problem in
In the literature, many contributions towards hospital and phar- the context of the pathologies being treated. Although the time series
maceutical logistics, using optimisation methods and lean principles shows a decrease over time, the wild fluctuation reveals that the si-
may be found. However, there seems to be a paucity of references about tuation is not under control and that the number of stock-outs may
ambulatory pharmacy and related logistic and transportation issues, increase again, at any moment, if measures are not taken.
hence, the relevance of this work. Fig. 3 shows the relation updated Kanbans/new patients and proves
how serious the inventory management problem is.
3. Materials and methods The analysis reveals that the Kanban cards were updated only in 17
% of the 34-day in the period analysed.
This work is based on a case study in the ambulatory pharmacy of From the 105 new patients who entered the system of the APh, only
an LHU in Portugal. The ambulatory pharmacy (APh) is part of the LHU 14 were formally recorded in the Kanban system, i.e. 13 % of the new
Pharmacy services. This APh is intended to provide outpatient with cases. A daily average of 3 new patients were tended to, i.e. 3% of the
medication, in other words, to patients who are not hospitalized at the total patients.
health facility. Another crucial issue is non-compliance with medicine delivery

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C. Castro, et al. Evaluation and Program Planning 80 (2020) 101801

Fig. 2. Stock-out - initial phase (March/April 2018).

routes. Although, OAs must deliver medicines two times a day, morning 3.2. Proposal of inventory management of ambulatory pharmacy
and afternoon, Fig. 4 shows this requirement is not always met. The
analysis of the chart reveals that although OAs may deliver medicines The solution found for the problems identified above is the im-
up to three times a day, they are known to not make any deliveries at plementation of an Advanced Warehouse (AW) with Replenishment by
all, more specifically 29 % of the days of the period studied. Most Levels. In this type of warehouse there are minimum and maximum
frequently, time of delivery is 4 p.m., when there are fewer patients in stocks defined for each product, which are replenished according to
the hospital pharmacy and in the APh. To note that, when routes exceed these levels, at most 2 times a week and whenever the stock reaches the
2, as defined, it is due to stock-out issues. That is, the product is already minimum value.
out of stock at the APh but, for reasons of delayed delivery or poor 231 references were studied and analysed (Table 1). Because of the
storage of the medicines, these are stored in the Pharmacy Servi- variations in the different references, they were divided into three
ceswarehouse, causing the OA to go to the APh to satisfy to fill an ur- classes:
gent order.
Considering that there are 3300 boxes of medicines in the APh now, • Class B - low demand - references with a demand less than or equal
which are kept in 5 cabinets and 2 refrigerators, it is clear, through to 5 boxes per month;
mere visual analysis, that there is an excess of boxes, and consequently • Class M - average demand - references with a demand greater than 5
some of them are stored inside crates on top of the cabinets. Note that boxes and less than or equal to 20 boxes per month;
the APh process is based on the Kanban system, and does not differ- • Class G - high demand - references with a demand greater than 20
entiate any product according to either level of demand or financial boxes per month.
cost. This system presents several problems, especially when the rules
are not followed: the Kanbans are misplaced or are not taken away In addition to these classes, hepatitis C medication was also dis-
when the order point is reached. Space limitations make the problem tinguished, since the treatment of this pathology requires prior au-
worse: swapping/misuse of the Kanban cards. Because the cards must thorisation from management and, when authorised, the medication is
be visible and correctly placed in the dedicated slots, small spaces make delivered at the hospital to complete each patient's course of treatment.
this task more complex. These issues can be addressed by applying an At the request of the hospital management, a distinction between
inventory management method. the references of medicines in stock in the pharmacy services, known as
"stockables", which correspond to about 23 % of APh medications, was
also made.
It was stipulated that all levels were set for one-month demand, as

Fig. 3. Kanban updated VS New patients (Inicial phase March/April 2018).

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C. Castro, et al. Evaluation and Program Planning 80 (2020) 101801

Fig. 4. Medications delivery route - initial situation (March/April 2018).

Table 1 The G class references became part of the stocked products, since an
Distribution of Ambulatory Pharmacy medicines. intermediate stock was created in the pharmaceutical services ware-
Total = 231
house.
The products belonging to the non-stock items would then be con-
Class B Class M Class G Hepatitis C Stockables trolled only by the computer system, with which a reorder (or direct
purchase request) would be made twice a week, on Mondays and
95 40 36 8 52
Thursdays. This inventory management is based on levels, taking in
consideration a minimum quantity to be kept in stock as safety stock
pharmaceutical services have been increasingly pressured by the pur- considering the stock variability in the management period, and a
chase service to increase their orders to lower costs. As the space maximum stock quantity generally related with medicines consumption
available for storage is quite small, the maximum quantity that can be level at the management period and with the available storage space.
ordered is the one that corresponds to the demand for one month. Reorder may occur outside the defined days, see equation 1:
Different strategies were created for each class. Initially, the pro- stock ≤ Qt minimum (minimum level quantity)
posal was to define levels as follows: one month for class B, fifteen days
for class M and one week for class G, which had to be changed due to Equation 1 - Condition for reorder outside the defined days for non-
the requirements of the purchase service. stockable medicines.
Accordingly, levels for class B and M were adjusted to a one-month The quantity to be ordered is always calculated according to
demand. Class G levels were defined for a fifteen-day APh demand. equation 2:
However, there would always be sufficient stock for one month in the
QtDPR = Qt maximum − stock + Pending Quantity
pharmaceutical services warehouse, for safety and to cope with fluc-
tuations in demand. This level was increased, because weekly demand Where:
was very high, as was the risk of running out of stock with the previous stock – Real Quantity;
/normal weekly replenishments. QtDPR – Direct Purchase Order Quantity;
All this process could be controlled through the Kanban system, Qt máximum – Maximum Level Quantity;
already in use at the beginning of the study. However, the small storage Pending Quantity – Quantity that remain to be delivered from the
space was found to be the reason for the poor management of these previous order.
cards. So, a parametrisation of the existing computer system was re- Equation 2 - Quantity of direct purchase order.
defined to meet the proposal made, i.e, in accordance with the division According to Fig. 5, the Direct Purchase Order is validated by the
in classes and different levels. director of pharmaceutical services with the purpose of checking units
Along with the resident IT team, inventory management modules per box, since the levels are defined per unit of tablet and not per box.
were designed to accommodate the proposal to be made, thus putting Next, a Direct Ordering Note is created which then generates the re-
an end to stocks management control using Kanban cards. quisition to the supplier. When the medicines arrive at the LHU, they
Two databases were then created, one for the stockable products are entered as Direct Receiving: they are received at the general
and another for the non-stockable products, in the pharmaceutical pharmacy and they are in transit in the pharmaceutical services until
services warehouse: they reach the APh. There they are again checked and received by the
pharmacist in charge, who is required to sign a form confirming the
• Non-stockable products: class B and M; medicine reception and the digitalisation of the code on the information
• Stockable products: Class G and stockable pharmaceutical services. system, and to definitive record the medicine into the APh system, both

Fig. 5. Reorder request of non-stockable APh products.

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C. Castro, et al. Evaluation and Program Planning 80 (2020) 101801

physically and electronically. The project had 3 phases:

Stockable products are also controlled electronically. However,
their level is calculated based on the Optimal Quantity Order, which • Initial phase - March and April
gives the minimum cost between the cost of holding stocks and the cost • Awareness phase - May and June
of placing an order, since this was the parameter that was already used • Implementation Phase - July and August
by the Pharmacy Services warehouse.
For these products a stock replenishment request is made, which is The analysis of the initial phase shows a decreasing number of
also generated twice a week, on Mondays and Thursdays, except when stock-outs, however with a very large variation and peaks at around
the equation 3 is validated: 6%.
The awareness phase was the phase in which the proposals for
stock ≤ Qt optimal
change were presented and KPIs started to be monitored. This phase
Equation 3 - Condition for re-order outside the two defined days, for started with great promise and showed a continuous decrease in stock-
stockable medicines. outs. Unfortunately, strikes in the healthcare sector influenced the re-
The quantity required at the time of reorder is calculated using sults negatively. Medicine deliveries were not made on time, orders
equation 4: were not processed, and concern with patient wellbeing represented a
setback for inventory management.
Qt SR = Qt optimal − stock
Nevertheless, the stock-outs did not exceed 4.5 %, which was al-
Where: ready gain, as can be seen in Fig. 8.
QtSR – Stock Reorder Quantity The official starting date of the implementation of the computer
Qtoptimal – Ideal Quantity system was August 7, but the project had been gradually implemented
Stock – Real Quantity by the beginning of July.
Equation 4 -Stock replenishment quantity. According to Fig. 9, at this time, values were around 4%, still suf-
For stockable products, there is no quantity of product pending as fering from the effect of strikes in the healthcare system. However, from
these are replaced almost immediately. Because this order is prepared August these values were around 1.5 % and the number of out-stocks
and filled by the pharmacist, there is no need for validation in advance were decreasing over time, again. There was a 30 % reduction in stock-
by the director of the pharmaceutical services. out.
Then, these medicines stay in store in the pharmacy services. The Analysis of the chart "Delivery of Medications from the AP" (Fig. 10)
following process is similar to the process of non-stockable products: shows that medicines are being delivered at 4 p.m. as planned, or at
products are only entered the APh system once they have been received another time to satisfy urgent requests or when a large quantity of
and validated by the service’s pharmacist, as follows in Fig. 6. medication requires, an extra route.
Class G products stored in the Pharmacy Services are controlled These results were also due to the level update of APh references.
through the Kanban system, and new values of Reorder points and The most evident result is the number of boxes stored in the APh, which
Quantity Order have been defined for the one-month demand. This went from 3300 to 2164, which represents a reduction of 66 % of boxes.
stock is managed according to the inventory management process of the Efficiency of the APh was increased due to level adjustment and the
general pharmacy. implementation of the new inventory management.
The delivery of non-stockable and stockable products is done de- Reduction of stock-outs
pending on the arrival of the ordered products or depending on the
preparation by the pharmacist in charge. It was defined that these • Stock-outs max. Initial = 6%
would be delivered every day at the end of the day, more specifically • Stock-outs max. Final = 1,5%
between 4 p.m. and 4:30 p.m., a shorter period of time than that of the • Efficiency = (6-1.5) / 6 = 0.75–75 %
APh, which resulted in a greater availability on the part of the phar-
macists in charge to distribute and administer the products. The request Reduction of existing stock
is generated automatically on the days referred to at 1 p.m.
• Initial stock = 3300 units
4. Results • Final stock = 2164 units
• Efficiency = (3300-2164) / 3300 = 0.34–34 %
From the creation of KPIs (patients serviced, new patients, stock-
outs, kanbans sent to order, Kanbans updated and time of departure of 5. Conclusions
the OA to the APh) to the implementation of the new Inventory
Management System, the results of the change were remarkable. The creation of management KPIs made analysing the problem
On the graphs below the project’s positive results are clear. Stock- quantitatively from the very beginning, i.e., daily collection of data on
outs were reduced by 30 %; a time for delivery of medicines to am- patients serviced, new patients, stock-outs, Kanbans sent to Order,
bulatory pharmacy was stipulated and the number of boxes stored was Kanbans updated and delivery time of medicines in the APh. was a
reduce by 66 %. The system’s overhaul culminated in a better service to novel service developed to increase the well-being of patients mon-
the patient. itored at home which it is intended to improve the program planning
Fig. 7 depicts a 30 % decrease in stock-outs from the beginning of and evaluation, as well as, the service provided to the users and at the
the project, in March, to August. Stock-outs/patients serviced decreased same time reduce operational costs. The case study encompassed three
from 6% to 1.5 %, which is noteworthy, despite the fact some factors different phases: initial, awareness and implementation. Focus on the
that influenced the intended results. initial phase, shows that sotck-outs varied significantly and reached

Fig. 6. Reorder request for of APh products.

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C. Castro, et al. Evaluation and Program Planning 80 (2020) 101801

Fig. 7. Evolution of stock-outs (March/August 2018).

Fig. 8. Stock-outs - awareness phase (May/June 2018).

The awareness phase registered a peak of stock-outs at 4.5 %.

Although no more variations in the number of stock-outs were ex-
pected, these still occurred as a result of several strikes in the healthcare
sector. In this phase, professionals, who had been made more aware of
the problem through KPIs monitoring, began to pay more attention to
the stocks.
In the implementation phase, as replenishment levels began to be
used in August, a 1.5 % record-peak of stock-outs was registered.
A reduction of 30 % for out-stocks and of 66 % for existing stock was
made possible by the parameterization of the computer system. A fixed
route was also defined and found to be always completed.
The change in attitude was evident from the onset of the im-
plementation of the project. Being confronted with the KPIs values
made it easier for healthcare professionals to accept the change and
Fig. 9. Stock-outs - implementation phase (July/August 2018).
maintain the project going.
The shortage in Human Resources means that inventory manage-
values of around 6%, which implies a very significant negative impact ment may sometimes be discarded. However, reorder requests made
as APh deals with medicines and treatment of pathologies that require automatically frees healthcare professionals to check new patients in
special care. Also, initially routes of delivery were found to not follow and out, and update stocks when necessary, without the need for a
standard, a problem that was considered to be one of the major causes comprehensive review of all the medicines in the pharmacy. It is im-
of stock-out. portant to note that this also avoids unnecessary expenses, allowing the
The room for warehousing in the APh was found to be too small for purchase of smaller quantities and, in some cases, reducing the final
the amount of stock it had in store, i.e., about 3300 boxes of medicines. cost.
The obvious excess of stock was easily verified from the crowded In conclusion, a case study is presented in a novel process developed
shelves to the boxes stored on the top of the cabinets. by a LHU in Porto, Portugal, to assist at home specific patients. Process’
A solution was offered, requiring all product references to be stu- KPIs were developed to assist the process management and assure the
died and analyzed. The analysis of the database showed that the de- continuous improvement of program planning and evaluation, by using
mand of the different medicines varied widely and therefore they several methods from Lean Thinking, such as, Kanban System and
needed to be divided into different classe, which were parameterized in Advanced Warehouse for inventory management levelling and optimi-
the software used in the hospital. zation techniques. This approach resulted in the improvement of

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C. Castro, et al. Evaluation and Program Planning 80 (2020) 101801

Fig. 10. Evolution of the Route of medication delivery (March/September 2018).

productivity, increase of patient level service quality, in the reduction Costa, J. A. P. (2013). Implementação de Armazéns Avançados em Ambiente Hospitalar –
of costs and, the most valuable impact, the increase of the quality of the Estudo de caso. Universidade do Minho Master’s thesis. 102p.
Costa, A. R., Barbosa, C., Santos, G., & Alves, M. R. (2019). Six sigma: Main metrics and r
healthcare services for the population. based software for training purposes and practical industrial quality control. Quality
This project made reducing stock and excess stock-outs, reducing Innovation Prosperity journal, 23(2), 83–100.
inventory costs, setting delivery routes, raising the entire medical Frankel, R., & Mollenkopf, D. A. (2015). Cross‐functional integration revisited: Exploring
the conceptual elephant. Journal of Business Logistics, 36(1), 18–24.
team’s awareness of the problem and committing to optimisation a Godeiro, I. G. O., Dantas, M. L. R., & Cyreneu, C. (2019). Organizational culture and qality
reality. practices TQM/Six sigma: A study in manipulationa pharmacies. Research in
Production and Development, 5, 1–19.
Gustavsson, M., & Jonsson, P. (2008). Perceived quality deficiencies of demand in-
Declaration of Competing Interest formation and their consequences. International Journal of Logistics, 11(4), 295–312.
Herdeiro, V., & Moraia, P. (2010). A new paradigm for hospital logistics. Tecno hospital:
The authors declare that they have no known competing financial journal of engineering and health management, 14–16.
Hong, J., Zhang, Y., & Mingxia Shi, M. (2018). The impact of supply chain quality
interests or personal relationship that could have appeared to influence
management practices and knowledge transfer on organisational performance: An
the work reported in the paper. empirical investigation from China. International Journal of Logistics, 21(3), 259–278.
Hospital Pharmacy Executive Council (CEFH) (2005). Hospital pharmacy manualPorto:
Acknowledgments Gráfica maiadouro (1st ed.). ISBN 972-8425-63-5.
Isken, M. W., & Littig, S. J. (2002). Simulation analysis of pneumatic tube systems. Journal
of Medical Systems, 26(1), 9–19.
We acknowledge the financial support of CIDEM, R&D unit funded Johnston, A., & Ozment, J. (2015). A firm-specific analysis of service quality costs.
by the FCT – Portuguese Foundation for the Development of Science International Journal of Logistics, 18(5), 387–401.
Kelle, P., Woosley, J., & Schneider, H. (2012). Pharmaceutical supply chain specifics and
and Technology, Ministry of Science, Technology and Higher inventory solutions for a hospital case. Operations Research for Health Care, 1(2–3),
Education, under the Project UID/EMS/0615/2019 54–63.
Marques, C., Lopes, N., Santos, G., Delgado, I., & Delgado, P. (2018). Improving operator
evaluation skills for defect classification using training strategy supported by attri-
Appendix A. Supplementary data bute agreement analysis. Measurement, 119, 129–141.
Moons, K., Geert, W., & Liliane, P. (2018). Measuring the logistic performance of internal
Supplementary material related to this article can be found, in the hospital supply chains – A literature study. Omega, 81, 205–217.
Moons, K., Waeyenbergh, G., & Pintelon, L. (2019). Measuring the logistics performance
online version, at doi:https://doi.org/10.1016/j.evalprogplan.2020. of internal hospital supply chains–A literature study. Omega, 82, 205–217.
101801. Oliveira, J., Sá, J. C., & Fernandes, A. (2017). Continuous improvement through “lean
Tools”: An application in a mechanical company. Procedia Manufacturing, 13,
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214–232. Information Management from Sheffield University and a PhD. in Operational

Santos, G., Gomes, S., Braga, V., Braga, A., Lima, V., & Teixeira, P. (2019). Value creation Management from Minho University. She worked 8 years in the industry and has a 27
through quality and innovation - A case study on Portugal. The TQM Journal. https:// years’ experience teaching being Professor of Operational Research, Decision Support
doi.org/10.1108/TQM-12-2018-0223 In press. models, Operations Research, Logistics, Supply Chain Management, Transportation in
Santos, G., Murmura, F., & Bravi, L. (2019). Developing a model of vendor rating to several courses of Polytechnic of Oporto. She supervised more than 30 masters’ theses,
manage quality in the supply chain. International Journal of Quality and Service and participated in several projects/researches, and national and international projects
Sciences, 11(1), 34–52. with companies, which resulted in several publications/communications.
Stank, T. P., Pellathy, D. A., In, J., Mollenkopf, D. A., & Bell, J. E. (2017). New frontiers in
logistics research: Theorizing at the middle range. Journal of Business Logistics, 38(1), José Carlos Sá is graduated in Production Engineering from the Minho University
6–17. (1998). He holds a Master’s Degree in Industrial Engineering -option: Quality, Safety and
Tanga, V., Siua, P. K. W., Choya, K. L., Hob, G. T. S., Lama, H. Y., & Tsang, Y. P. (2019). A Maintenance, by the Minho University (2010). In 2015 he is awarded the title of
web mining-based case adaptation model for quality assurance of pharmaceutical Specialist in Quality Management, by the Polytechnic Institute of Viana do Castelo. He is
warehouses. International Journal of Logistics, 22(4), 325–348. currently a PhD student in Industrial and Systems Engineering. José Carlos is a professor
Teixeira, D. R. V. (2012). Armazém avançado em contexto hospitalar: Método de reposição at the Engineering School of Porto, at the Polytechnic of Porto, and consultant (since
por níveis. Universidade de Aveiro Master’s thesis, 93p. 2004) in several companies, in safety management, quality management and industrial
Thai, V. V. (2013). Logistics service quality: Conceptual model and empirical evidence. management. In 2015, José Carlos became a “senior member” of the Portuguese Engineer
International Journal of Logistics, 16(2), 114–131. Association. He has made several presentations at various national and international
van der Laan, E., van Dalen, J., Rohrmoser, M., & Simpson, R. (2016). Demand forecasting congresses and has published several articles and chapter books on quality management,
and order planning for humanitarian logistics: An empirical assessment. Journal of safety management and lean management. E-mail: [email protected]. Author’s ORCID:
Operations Management, 45, 114–122. http://orcid.org/0000-0002-2228-5348.
Volland, J., Fügener, A., Schoenfelder, J., & Brunner, J. O. (2017). Material logistics in
hospitals: A literature review. Omega, 69, 82–101. Gilberto Santos is Prof. at Polytechnic Institute Cávado Ave (IPCA) Barcelos, Portugal.
Vries, J. (2011). The shaping of inventory systems in health services: A stakeholder He holds an Aggregation (DSc) title in Industrial Engineering from de New University of
analysis. International Journal of Production Economics, 133(1), 60–69. Lisbon and a PhD degree in Mechanical Engineering from the Minho University, Portugal.
His current research interests include industrial and mechanical engineering, namely,
Catarina Castro hold a Master Course in Engineering and Industrial Management. She innovation, quality systems and integrated management systems. Gilberto participates as
began her academic career in 2013. In order to elaborate the Master's thesis, she un- a speaker in several national and international conferences, and he is currently author of
dertook an internship at Pedro Hispano Hospital in Portugal. The course also included the several publications in integrated management systems (IMS) – QES (quality, environ-
preparation of an exchange term in Poland for 6 months. Nowadays she is working in a ment and safety) (books, papers in international and national journals). He is member of
Portuguese company of the food sector, where she works as Production Engineer. the research team of several IMS – QES research projects and also supervises Master and
PhD thesis, as well reviewer of international journals. Gilberto founded a master’s course
Maria Teresa Ribeiro Pereira is nowadays a fulltime Associate Professor and on “Integrated Management Systems QES” at the College of Technology of Polytechnic
Coordinator of the CIDEM, research center of mechanical engineering. She is sub-director Institute Cávado, where he was Director of the MSc during the first six editions. Gilberto
of the master course of Mechanical Engineering- branch Industrial Management and of Santos is the corresponding author and can be contacted at: [email protected]. Author’s
the master course of Industrial engineering & management of ISEP. She holds a ORCID: https://orcid.org/0000-0001- 9268-3272.
Production Management Engineering degree from Minho University, a Master course in

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