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Establishing a Laboratory Inventory Management System

Contributors: LaToya Lee Jones

Every laboratory needs supplies, and not having an inventory management system in place to manage those supplies can be costly. Supplies in many labs include standards, reagents, personal protective equipment (PPE), glassware, notebooks, and cleaning materials, to name a few. Too little inventory runs the risk of runouts that disrupt work, while too much inventory runs the risk of it becoming obsolete or expired. Furthermore, inventory ties up capital and occupies space that could be used for more productive purposes. A laboratory inventory management system will ensure you have the right quantities on hand and that analysts can quickly locate the materials they need to perform their jobs. Below, we outline steps to take to establish a laboratory inventory management system: 

Assess the Current Situation 

As an initial step in establishing your inventory management system, assess the current situation for each inventory item, documenting the following: 

  • Location of storage areas – make this an exhaustive review (e.g., are there boxes of gloves stored in the drawers of each bench?) 
  • Quantities currently on hand 
  • Any obsolete/expired material 
  • Supplier(s) 
  • Options for order quantity (e.g., are there order minimums or quantity discounts?) 
  • Typical lead-time 

During the inventory assessment, evaluate the condition of the storage areas. Make sure there is a place for everything and that it’s clearly labeled. If there’s any disorganization, initiate efforts to eliminate waste through visual controls. 

This evaluation is also a good time to seek input on inventory practices from team members: 

  • Inefficiencies observed 
  • Use of inventory items (e.g., is there a reason why we have ethanol in three bottle sizes?) 
  • Ideas for improvements 

Determine Inventory Levels 

The next step is to understand what materials you must have on hand and the appropriate quantities. A just-in-time (a.k.a pull) system operates on the principle that materials are provided only when necessary. These systems drive down inventory levels because they make visible all the waste and inefficiencies in the operations. While an inventory level of 0 is ideal, the world does not work that way; agar plates might be sold in packs of 50 and may not be delivered until the next day. For each item, take into consideration: 

  • Frequency of use 
  • Minimum order quantities 
  • Delivery lead time 
  • Impact of runout to the operations  
  • Storage locations (e.g., do you want to store PPE near multiple points of use?) 
  • Replenishment level (i.e., when to order more) 

Establish Controls 

After determining where your inventory will be located and the required quantities, set up a process to ensure replenishment occurs as necessary. Laboratory Information Management Systems (LIMS) provide capabilities to manage inventory but are best suited for key consumables such as reagents. Routine items, like wipes or bouffant caps, can be burdensome to maintain in LIMS. A very effective way to manage inventory is a visual system known as Kanban, which is the Japanese word for signboard.   

A Kanban system produces a visual indicator when it’s time to reorder. A very simple Kanban approach works as follows: 

  • Each inventory item has space on a shelf with room for two identical bins – one directly behind the other 
  • Each bin is labeled with the contents and its shelf location 
  • Shelf spaces are labeled to indicate which item belongs in that slot 
  • When an analyst removes the last item from the front bin, they will: 
    • Remove the empty bin from the shelf, pull forward the rear bin, and place the empty bin in a designated spot 
  • Each shift a supervisor reviews the empty bins and: 
    • Reorders the contents and moves the bin to a location designated for items that are ordered and pending delivery 
  • Upon delivery: 
    • Contents are placed in the empty bin, and the restocked bin is returned to the back slot on the shelf 

There is certain and helpful information that should be included on the bin label, including the item description, part number, storage location, order quantity, expected lead time, supplier name, supplier part number, bin number, and number of bins (e.g., 1 of 2). 

A variation of this Kanban system has a card with each bin. The bin stays on the shelf and the card is moved when a bin becomes empty and after it’s restocked. The information identified above is tracked on the card. 

Final Steps 

Once the inventory management system is in place, train your staff on its use and monitor it for effectiveness. And, after the system has become ingrained in the lab operations, look for improvement opportunities.  Some questions that can help identify those opportunities: 

  • Can you reduce the quantity kept on hand? 
  • Could you reduce the reorder quantity? 
  • Does it make sense to split the inventory into more bins? 
  • Are the supplies stored in the best location for efficient operations? 

Right sizing your lab’s inventory leads to many opportunities to improve efficiencies. Having an inventory management system provides you with the tools you need to continually fine-tune your process and drive even more efficiencies, helping you to truly gain control of your lab inventory. For further guidance on improving lab efficiencies or establishing a laboratory inventory management system, connect with our team today. 

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Tags: Supply Chain Planning & Execution, Digital Labs