Inventory Management: a hard challenge with high ROI

April 4, 2025 -- Effective digital inventory management for reagents in molecular diagnostic devices is crucial to help infectious disease programs have reliable supplies and save money. Without proper inventory management, stockouts can occur, leading to delays in diagnoses and increased disease transmission. Conversely, overstocking due to poor inventory practices leads to excessive reagent expiration and waste.

A 2022 study in Ethiopia's Gambella region revealed that inadequate inventory management led to a 12.94% wastage rate of laboratory commodities, amounting to approximately $37,488.76 in losses over a year. This is for a region with less than 1% of Ethiopia’s population!(1)

Optimizing inventory levels and preventing overstocking not only minimizes waste, but also ensures that reagents are available where and when needed, leading to substantial cost savings and enhancing overall laboratory productivity.(2)

Moreover, digital inventory management systems enable laboratories to forecast demand accurately and streamline procurement processes. Such predictive capabilities are vital in distributed, resource-limited settings, where budget constraints necessitate meticulous resource management to maintain uninterrupted diagnostic services.(3)

What is SystemOne Doing About It?

Understanding the need and benefits isn’t enough; nor is building an inventory system that simply deducts one cartridge each time a test is performed or adds one batch each time a lab receives a new shipment. Building and deploying a useful inventory management system means solving more difficult challenges.

Challenges?

Developing robust inventory management software for GeneXpert, Truelab and other devices’ diagnostic cartridges presents several significant challenges within the context of a distributed laboratory network and supply chain:

Inconsistent Lot Number Tracking:

Cartridge lot numbers on large shipment boxes often don't match those on individual cartridge packages inside the box. This discrepancy complicates accurate inventory tracking and necessitates opening bulk packages to record the correct lot numbers.

Heterogeneous usage and burden:

Diagnostics are not placed in equal-use settings requiring individual laboratory forecasting and consumption trends. Aspect provides usage, forecasting and ahead-of-time notifications at the individual laboratory level to ensure that all labs, regardless of the test volume they process, receive individual notifications.

Power Interruptions Affecting Inventory:

Frequent power outages can cause test failures or restarts, leading to discrepancies between cartridge consumption and test completion records. Both software and inventory management procedures need to be capable of measuring this source of inventory shrinkage in order to determine if an alternative intervention is warranted.

Inventory Transfers in Complex Distribution Networks:

Cartridges often pass through multiple layers—national, regional, and local warehouses—before reaching the end-user at a lab. It's also common for cartridges to be transferred between labs when demands shift. A failure to record these transfers creates discrepancies between recorded and actual stock levels. Digital inventory systems should facilitate recording both sending and receiving consumables between inventory hubs.

Inventory Shrinkage Management:

Shrinkage is inventory loss that results from something other than productive consumption. Cartridge expiration, damage, theft, or administrative errors are common examples. Ultimately, shrinkage represents a sunk cost—inventory the health system bought but can no longer use. Shrinkage prevention and management requires the measurement of its occurrence and cause, along with analysis of its trends at the facility, regional, and national levels.

Delayed Data Reporting:

Diagnostic machines may remain offline for extended periods due to connectivity issues or maintenance. When they come back online, bulk data uploads can disrupt real-time inventory reconciliation, leading to discrepancies.

Varied Customer Requirements:

Different regions and programs have unique processes and expectations for inventory management. Developing software that is both flexible and adaptable to these diverse needs is essential, but challenging.

Cartridge re-use:

Devices regularly produce testing errors, but often lab personnel notice that the cartridge in question might still work. So they will try it in another module, where it will either work or report another error. In this case, the diagnostic device records two tests (or more, if the process is repeated), but only one cartridge was used. Multiply that for dozens or hundreds of cartridges... another difficulty to account for in the software.

These challenges underscore the need for tailored, context-specific solutions in inventory management systems for diagnostic devices in resource-limited settings.

And that is exactly what SystemOne has created. Please let us know if you want a demonstration of Aspect’s inventory management capabilities by clicking on our contact form.

Our goal is to close the gap between diagnosis and treatment worldwide. And secondary to clinical outcomes, we aim to impact the high cost of medical devices and reagents by ensuring the efficient use of resources, reducing financial waste, and, most importantly, guaranteeing the timely availability of diagnostics critical for effective disease management and control. Without robust connectivity, distributed diagnostics will never be cost-effective, and infectious disease programs will continue to miss their targets. _____________________ Sources:

1. Heliyon (Cell Press)

Link: https://www.cell.com/heliyon/fulltext/S2405-8440%2822%2902645-7

Title/Description: Study on laboratory commodity wastage in Ethiopia’s Gambella region highlighting inventory management issues.

2. Avantor Sciences

Link: https://www.avantorsciences.com/us/en/support/knowledge-center/lab-inventory-management

Title/Description: The importance of digital inventory management systems for reducing waste and optimizing lab productivity.

3. ResearchGate

Link: https://www.researchgate.net/publication/384987682_Optimizing_pharmaceutical_inventory_management_A_global_framework_for_efficiency_and_cost_reduction

Title/Description: Global framework emphasizing inventory management to improve pharmaceutical supply chain efficiency and cost reduction.