Enhancing medication inventory management using vendor-managed inventory: evidence from healthcare clinics in Malaysia

Abstract

Medication inventory management continues to pose a significant operational challenge for healthcare clinics, particularly where inventory monitoring and replenishment activities are conducted manually. Frequent stock shortages, inconsistent lead times, and low order fulfilment rates may disrupt treatment continuity and reduce operational efficiency. This study investigates the potential impact of Vendor-Managed Inventory (VMI) on medication inventory performance within a network of twelve company-owned healthcare clinics in the Klang Valley, Malaysia. The study adopts a quantitative case study approach using operational inventory data collected over a six-month period. Three commonly used medications; paracetamol, cetirizine, and ultra-carbon charcoal were selected for analysis. A manual Excel-based simulation was developed to represent the existing inventory system, while Arena discrete-event simulation was employed to model the proposed VMI system. Inventory performance was evaluated using three key indicators: lead time, stockout rate, and order fulfilment rate. Independent-samples t-tests were conducted to determine whether the differences between the manual and VMI scenarios were statistically significant. The findings indicate that the VMI system substantially improved inventory performance. Average lead time was reduced from approximately 31 days to 10 days, stockout rates decreased from approximately 98 percent to around 20 percent, and order fulfilment rates improved from approximately 51.8 percent to 80 percent. Statistical analysis showed that all improvements were significant at p < 0.001. The findings suggest that Vendor-Managed Inventory has strong potential to enhance medication inventory performance within the selected clinic network. Nevertheless, the results should be interpreted within the context of the selected case environment and are not intended to be directly generalised to all healthcare settings.