When Indiana Jones was searching for the Holy Grail, his instinct was to pick the most practical of chalices. In the movie, he chose “the cup of a carpenter” – a wise decision. In supply chain, “we do not follow maps to buried treasure, and “X” never, ever marks the spot.” Tenured supply chain professionals know that when it comes to data, it’s the quality of the content that really matters and not the ERP system that contains it. In fact, getting accurate and actionable information back into your Materials Management Information System (MMIS) is the real Holy Grail.
For many years, a huge movement has been building in the healthcare supply chain to adopt and implement data standards to support patient safety and improve supply chain management. The Global Trade Item Number (GTIN) is a unique 14-digit number assigned to a product for standard product identification. Each number represents a different packaging string. The global uniqueness of the value ensures you can identify a given item, a given UoM, and you can trace it to the manufacturer.
The GTIN brings about many benefits such as:
- Efficient traceability
- Less time spent on manual documentation
- Improved order and invoice process
- Optimized receiving
- Reduced inventory
- Improved product recall
- Improved benchmarking and management of supply cost
Now, let’s get back to that UoM issue we’ve all been struggling with for decades. On any given day, you may order 100 and receive 1000 because they are sold in units of 10, or you may order 20 cases and receive 20 boxes causing shortages. This increases returns processing, putting patient care at risk, driving up costs, and creating cash flow issues for hospitals around the country. The solution to this age-old problem is indeed GTIN allocation rules for product hierarchy and packaging measurements but it also depends on how you use the information in your MMIS.
GTIN functionality in an MMIS relies on the item code-GTIN relationship. This relationship can be established using the cross-reference type functionality. This can be done in a few ways:
Option 1, One Item to Many GTINS: This approach associates a distinct UoM (Box, Case, etc.) for every packaging configuration of an inventory item and denotes a primary UoM. This offers more flexibility for warehouse operations. Basically, the inventory transaction always occurs in primary UoM but often, this option allows demand for an item to be fulfilled in any UoM. This means that a customer may place an order for an item in cases but net inventory across all packaging configurations will be considered for allocation. Eventually, the order may be fulfilled by the box.
Option 2 One Item to One GTIN: This approach associates a distinct Inventory item to every packaging configuration. This option allows the user to view inventory across GTINs, therefore it is indeed possible to view stock of cases, pallets, eaches, as they are defined as different inventory items. However, in many MMIS’s this option does not allow demand for an item to be fulfilled in a different packaging string so if a customer places an order in pallets his order will be back-ordered when no pallet stock exists even though sufficient inventory may be available in cases. Today most organizations have real-time visibility into backorders and can quickly change their buy UoM, so the order is filled accordingly, and it seems logical to say that understanding every GTIN and every UoM has its benefits.
Either of these two options can be modeled in most MMIS but if you really want to solve for UoM, you may want to drink from the chalice that ties one GTIN to one product UoM.
It seems these days that the GTIN is indeed a standard that has withstood the test of time. Materials managers across the country have found a way to get this information back into their MMIS but it’s not really the Holy Grail of data standards. Finding a good source for GTIN, HCPCS, Rev Codes, UNSPSC, description…is vital to the health of a supply chain. Don’t forget, the Payers are the customer too. The savings an organization can find in simply controlling the nonstock, non-file spend is astounding. Product pictures alone can drastically reduce returns and restocking fees. Our advice, choose wisely my friends. The quality of the content you feed your organization matters now more than ever. It’s not the “Last Crusade” for supply chain professionals but it’s definitely one of the most meaningful.
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About the Author
Lee Ann McWhorter is the Vice President of Business Development at Meperia. Her primary goals are to reduce data error, reduce cost and improve patient safety in the healthcare industry. Lee Ann has worked with the founders of Meperia for over 16 years and understands the breakpoints in the healthcare supply chain and the need for unbiased, quality data moving forward. For more information about Meperia please reach out to email@example.com.