Managing the cost of product expirations

Sept. 15, 2016

Expiration dates have become ubiquitous on medical supplies. When I started in this field there were limited items with expiration dates — primarily medications and items that might change in composition over time.

Since then it seems as though manufacturers have put expiration dates on almost everything. Of course, any item with an expiration date can no longer be used for patient care if that date has been exceeded. Discarded expired goods are one aspect of the shrinkage portion of carrying costs.

There are many reasons why an item might expire before it is used:

  • It is a low-use item and must be purchased in a quantity that is greater than the normal usage for the period in which it is okay to use.
  • It is an item taken from its normal storage location and left somewhere else (like a drawer) then found expired.
  • It is an item that was taken from its normal storage location and then returned at a later time after it had expired.
  • It is an item that was not rotated or placed correctly in its storage location.

Regardless of the reason, the vast majority of losses due to expiration are avoidable. And cost avoided by controlling expirations goes right to the bottom line.

There are many strategies used to control and avoid expirations. But one thing I have rarely seen is also one of most common sense strategies you can take. It is a best practice that few follow: Tracking losses due to expiration.

Well-known author and business theorist Peter Drucker is often quoted as saying, “If you can’t measure it, you can’t improve it.” The same is true if you can measure it, but you elect not to. Everyone knows that some of the products they purchase wind up expiring before they can be used. But do you know what the actual extent of the problem is in your organization? If you could demonstrate the extent of the problem, might you be successful in getting the resources you need to better control it?

Implementing an expiration tracking program may not be easy. It is likely that most expired goods are identified by clinical staff and are just discarded. To the inventory manager, this looks like usage. Staff may be reluctant to admit that they have let a product go unused. It will take an education program to demonstrate the benefit of tracking expired goods. Providing an easy way to “return” these goods will also help.

With the documentation in hand you can proceed to part two of the expiration best practice: Implementing a program to control and avoid losses from expiration. It is not enough to pull expired or about-to-expire goods so they are not inadvertently used on a patient. The best systems minimize losses due to expiration. In addition to the tracking as noted above, the best systems assure that

  • the items closest to expiration are used first;
  • items getting close to expiration are clearly labeled as such; and
  • items getting close to expiration are moved to the department where they are most commonly used.

4-step program

One way to accomplish this without excessive use of labor is a quarterly expiration monitoring program. The basic parts of such a program has all supply storage locations checked for outdates once each quarter.

  • Step 1 — each quarter all dated items are checked and rearranged so they are in date sequence with the oldest in the front. If there are any expired goods in storage, they are removed and documented.
  • Step 2 is the key. Any items that will expire within the coming quarter are identified in some way. One option for identification is using color coded sticky dots with each color associated with a specific month. This makes it easy for the user and the supply technician to notice (and use) soon to expire items.
  • Step 3 depends on the item. If the item is one that is frequently used in some departments but infrequently used in others, the short-dated items are moved to the higher-use departments. In this way you have the best expectation that the items will be used before they expire. Overall, low-use items are just left at the front of the storage area.
  • Step 4 occurs on the off months. At the end of each month a check must be accomplished to pull all the stock with that month’s dot. This can be accomplished by the supply technician assigned to that unit or to a single individual who is assigned this specific task.

Some organizations do the quarterly check but discard all the items that will expire within the next three months. This alternative is less work and will result in an extra safety factor. However, it will create unnecessary waste.

Simply by tracking the cost of expirations and reporting that on a regular basis, you will often see improvement as staff begins to pay more attention. Combining a tracking system with a management system will put you in the best practice league and help to avoid unnecessary costs.