ABC Classification System
Institutional Affiliation
Date
Key term and interest of key term
The key term for this study is ABC classification system. I am interested in the study of the ABC classification system is due to its importance in providing logistical operations, efficiency, and profitability in businesses. My main focus is to further the study of the ABC classification system, and incorporate other similar studies. My interest is on its application in critical business likes human health as well as understanding its pros and cons. The world today is experiencing rigorous competitiveness in business. Companies that are in a position to offer services to their customers at any time, in any quality and quantity are more advantaged.
Explanation of the key term
ABC classification system is an inventory system applied in the management of materials and distribution. The system categorizes inventory into three classes, each class containing different management control. Class A represents the most valuable products, which provide the highest share of profit without consuming much of the resources. In class, A20% of the products contribute 70-80% consumption annually. Class B represents the middle products which provide at the bottom line but are not significant enough. Classes B 30% of the products contribute 15-25% consumption annually. Classes C are the tiny products that are important in profit-making, although alone do not impact value to the business. Class C 50% of the products contribute 5% consumption annually.
Major article summary
GünerGören et al. (2017) provide the reader with a comprehensive study on how ABC classification determines the importance of drugs in a hospital. The writer proposes the ABC classification system as one of the most implemented systems. According to the author, hospitals are to ensure that they keep drugs according to their importance and cost to minimize holding cost as well as inventory cost. The author furthers his study by explaining that, lack of proper inventory management in hospitals leads to consequences like death, disability and difficulties in compensating and avoiding damage. Therefore Control techniques must be applied. The writer states that an effective and well-planned inventory in health institutions is essential in determining demand definitively. The well-planned inventory optimizes the use of financial resources, maximizes opportunities offered by technology, and provides timely supplies. He continues to explain that inventory in hospitals has an essential share in overall cost. Therefore hospitals are required to adopt control techniques for inventory to cut expenses. For hospitals to realize financial stability amid competition and technology, they must ensure the availability of medicine, and medical supplies at the right time, quantity, location, quality, and price.
According to the study, to achieve this, the most expensive drugs were placed in class A. The study used an excel based program which classifies drugs using the ABC classification system. According to the writer, 137 items for the year 2015 were analyzed using ABC classification system to determine; 47% were vital drugs, 39% were essential drugs, while 71% were found to be cheap and desirable. The writer presented the findings in tables and screenshots of the excel format. The writer explains that the use of the ABC classification system will significantly help the hospitals to do the analysis efficiently. As shown in the study, this system will further eliminate shortage problems, and the drugs will be prioritized based on the analysis.
Discussion
The study by GünerGören et al. (2017) relates to the ABC classification system. He has demonstrated the application and the impact of the ABC classification system in hospitals. The study reviews the significant impact of the system in effectively managing drugs. The writer explains that the lack of proper inventory management in places like hospitals leads to deaths, disabilities, and difficulties in compensating and avoiding damages. Through the case study, the writer has shown how it is possible to efficiently control the movement of drugs in a hospital using the ABC classification system. In the study, he explains how vital the ABC classification system is not only in classifying drugs but also in the other areas such as research in the health system. Just like other related articles, the writer has presented his findings through tables and screenshots. The author has further shown how easy and effective ABC classification is as well as its application. He has emphasized the need for every business to embrace this system.
Other articles equally emphasize the need to implement the ABC classification system for inventory management in different sectors. Many businesses have taken seriously the work of managing the inventory efficiently through the ABC classification system due to surplus of stock and for the logistical and financial well-being of the business (Cherif et al., 2017). According to Stojanović et al., (2017), management is a very crucial segment of any company as it is vital to the success of the business operations. ABC classification system not only impacts finances in an institution but also other areas, such as space, human resources, simplification, and transparency (Pandya et al. 2016). According to (Siddarth Sai et al. 2018), the ABC classification system should be implemented in all companies to enable them to identify the degree of importance of products to classify them accordingly. All the articles use related concept and ideas in defining as well as implementing the ABC classification system. They use associated studies to emphasize the importance of the ABC classification system in business management and growth.
References
GünerGören H, Dağdeviren O (2017). An excel-based inventory control system based on ABC and VED analyses for pharmacy: a case study. Galore International Journal of Health Sciences & Research.
https://www.gijhsr.com/GIJHSR_Vol.2_Issue.1_March2017/3.pdf
Cherif, H., & Ladhari, T. (2017). A New Hybrid Multi-criteria ABC Inventory Classification Model Based on Differential Evolution and Topics. International Conference on Hybrid Intelligent Systems. https://link.springer.com/chapter/10.1007/978-3-319-52941-7_9
Pandya¹, B., & Thakkar², H. (2016). A Review on Inventory Management Control Techniques: ABC-XYZ Analysis. REST Journal on Emerging Trends in Modelling and Manufacturing, 2. http://restpublisher.com/wp-content/uploads/2016/09/A-Review-on-Inventory-Management-Control-Techniques-ABC-XYZ-Analysis.pdf
Siddarth Sai, M. S., Malvika, & Samhitha, M. (2018). A Study And Discussion On ABC Analysis Of Stores At Nizam’s Institute Of Medical Sciences, A 1300 Bedded Tertiary Care Teaching Hospital At Hyderabad. Journal of Business and Management. http://www.iosrjournals.org/iosr-jbm/papers/Vol20-issue6/Version-8/H2006085961.pdf
Stojanović, M., & Regodić, D. (2017). The Significance of the Integrated Multicriteria ABC-XYZ Method for the Inventory Management Process. Acta Polytechnica Hungarica. http://acta.uni-obuda.hu//Stojanovic_Regodic_76.pdf