Ohio Administrative Code › Title 3364 - University of Toledo › Chapter 3364-40 - Fees and Reimbursements › Section 3364-40-06 - Supplier owned inventory (consignment) policy

Current through all regulations passed and filed through July 1, 2024
(A)
								Policy
			 statement
The university of Toledo medical center
				("UTMC") will enter into a supplier-owned inventory (consignment) agreement in
				which UTMC will set forth the terms and conditions under which products will be
				consigned to the hospital. All consignment agreements must be contracted and
				signed off by UTMC's purchasing department.
(B)
								Purpose of
			 policy
To ensure UTMC maximizes its financial
				position as effectively as possible, the hospital will consider consignment
				options when acquiring medical supplies. This policy sets forth the terms and
				conditions under which a supplier will provide consignment inventory of certain
				products in the quantities mutually agreed upon for the purpose of minimizing
				UTMC's investment in inventory, and to ensure that products are readily
				available when required to meet patient needs. UTMC will not accept liability
				for products or equipment unless specifically stated and agreed
				upon.
(C)
								Definitions
Consignment inventory - a product or
				group of products provided by a supplier, stored on UTMC property but not paid
				for by UTMC until actual use. These products typically have a shelf life and
				may represent high dollar values.
Supplier - any representative of a
				manufacturer or company who visits UTMC for the purpose of soliciting,
				marketing, or distributing products or information regarding use of products,
				equipment and/or services.
Zero cost purchase order ("PO") -
				written document the supplier will use to ship the initial consignment
				inventory quantities to UTMC.
Period automatic replenishment ("PAR")
				level - the maximum inventory level of consignment product, mutually agreed
				upon, to be held by UTMC and to which the supplier and inventory control
				department will insure quantities of stock will never exceed.
Periodic inventory review ("PIR")- the
				process of evaluating inventory levels on a regular basis to determine if
				correct level of inventory is accurate, if current product is still required,
				if new or improved product should be added, or replacement of existing product
				near to or past expiration date.
(D)
								
			 Procedure/requirements
The following procedures and
				requirements apply to consignment inventories:
(1)
									Consignment
			 agreement - requests for consigned products will be initiated by the requesting
			 department in which the products will be placed. All agreements will be
			 reviewed, approved and managed by the purchasing department. All agreements
			 will follow UTMC's contract approval routing process.
(2)
									Initial
			 consignment inventory - all products to be consigned must have a completed and
			 signed consignment agreement on file in the purchasing department. Supplier
			 agrees to provide UTMC consignment inventory consisting of specific products as
			 listed in the consignment agreement. The consignment inventory is placed by the
			 supplier at no charge to UTMC with the use of a zero cost purchase order.
			 Shipping or hand delivery instructions will be provided on the purchase order.
			 The delivery of the consigned products should take place at an agreed upon time
			 with the inventory control department. Upon receipt and validation of consigned
			 quantities, inventory control will notify the purchasing contract manager for
			 item build in enterprise resource planning ("ERP") system.
(3)
									Consignment
			 inventory levels - consignment inventory will be limited to the mutually agreed
			 upon levels between supplier representatives, the requesting department and
			 purchasing based on current usage of similar products. The supplier may not use
			 UTMC as a storage facility for products not represented on the consignment
			 agreement.
(4)
									Ownership and inspection - UTMC recognizes that
			 consignment inventory is the property of the supplier. As such, it is the
			 responsibility of the supplier to conduct a periodic inventory review on a
			 quarterly basis for expiring and outdated products, and to replace any such
			 products in a timely manner with like-for-like product at the then contracted
			 price. Under no circumstances will UTMC be responsible to pay for supplier
			 owned, expired product.
(5)
									Periodic inventory review - on a quarterly basis, an
			 inventory review is to be conducted and documented. The inspection report must
			 be signed by a supplier representative and a person from UTMC's inventory
			 control team. With reasonable notice, UTMC agrees to provide supplier's
			 escorted access to its inventory to conduct inspections of consignment levels,
			 verify quantities and condition of the inventory. All adjustments to the
			 inventory are to be documented on the PIR form.
(6)
									Modifications to
			 consignment inventory - any additions, deletions or changes to the consigned
			 products must be in writing and presented to the purchasing department prior to
			 modification being made. Substantial changes to products (i.e., changes to
			 product itself, packaging, pricing, catalog number) will require approval from
			 purchasing prior to its deletion or addition to the consignment
			 inventory.
(7)
									Pricing- purchasing is responsible for negotiating
			 pricing for consigned inventories. Pricing must be agreed to in writing prior
			 to any product being delivered. Pricing should be held firm for a minimum
			 period of at least one year from the date the agreement is
			 signed.
(8)
									Return of inventory - UTMC can, at any time, return
			 unused or expired items from consignment inventory to supplier. "Unused" is
			 defined as any unopened package, regardless of package condition. For sterile
			 products, "unused" is defined as product whose sterility has not been
			 compromised.
(9)
									Reductions in inventory levels - upon completion of
			 periodic inventory reviews, if an item has not been utilized in a reasonable
			 time period, the need for that item to be consigned will be reassessed.
			 Supplier retains the right to have an item removed from UTMC upon their
			 discretion after providing UTMC with a thirty day notice.
(10)
									Inventory
			 replacement - upon use of a consigned item, UTMC will issue a purchase order
			 for the replacement of consumed item. The supplier will bill UTMC for the
			 replacement item referencing the purchase order number. Failure to submit
			 invoice with proper PO number will delay payment.
(11)
									Product recalls
			 - supplier shall notify UTMC inventory control and purchasing departments
			 immediately of any product recall or alert, voluntarily or otherwise. Supplier
			 agrees to respond timely to any UTMC generated recall, or
			 alert.
(12)
									Term and termination - An agreement shall have an
			 initial term of one year from the signing date, and may be renewed for
			 successive one year terms upon the mutual written consent of supplier and UTMC.
			 An agreement may be terminated, without cause, upon thirty days advance written
			 notice by either party.