CAN INVENTORY CONTROL SYSTEMS OF NATIONAL HEALTH LABORATORY SERVICES, KZN ASSIST TO RECOVER BILLIONS OWED BY KZN HEALTH DEPARTMENT?

Abstract

The National Health Laboratory Services recently complained to Parliament that the KwaZulu-Natal provincial health department is failing to pay R1.2 billion owed for laboratory tests. In dealing with non- payment and inventory management at NHLS KZN the study conducted involved 65 participants drawn from 16 laboratories, 8 hospitals and 8 clinics in three KZN districts, namely, Sisonke Municipality, Ugu District Municipality and Umgungundlovu.
The study was based on post positivist research paradigm with both a survey and qualitative document analysis and interviews conducted with key stakeholders. The key findings in the study highlight the critical need to manage inventory so as to lower holding costs, avoid stock outs and satisfy customers (Stevenson, 1999:561, McHugh, 2006, Lee, 1996 and Chen and Simchi-Levi, 2004). In order to avoid stock outs and achieve satisfactory levels of customer service, inventory must be viewed periodically (Stevenson (1999:561, Cachon and Fischer, 2000, Fergruen and Heching, 1999). Over 77% respondents supported the view that NHLS need to introduce electronic data interchange (EDI) that can assist in coordinating the flow of materials from laboratories to health departments so as to improve quantity and allocation decisions. For debt collection to improve at NHLS, it is therefore important to introduce min-max system, build to order, build to stock, ABC analysis, vendor managed inventory (VMI), electronic data interchange (EDI), automatic pipeline inventory and order based production control system (APIOBPCS), stochastic inventory systems and genetic algorithm (Smaros, Lehtonnen, Appelqvist and Holstrom, 2003, Van der Laan and Salomon, 1997:264).