Par Level Management

Par Management, Par Locations Par Items are commonly used in healthcare and other industries to maintain inventories near point of use. Par Locations may be restocked from either a distribution center, or directly from a supplier.

Par Levels differ from a normal inventory location in that each item has a targeted maximum stock on hand, i.e. a Par Level is defined for each Par Item, and periodically (e.g. daily), each item in the Par Location is replenished back up to their respective full Par Levels.

Par Levels should be determined based upon:

  • Average, Minimum, and Maximum Daily Usage, as well as Variability in Usage of each item, between replenishment cycles
  • A Safety Stock value is added to the calculated value above, to provide a buffer in the event of higher than normal usage and/or delayed replenishment

A common formula for Par Level is:

Par Level = (Average or Maximum Daily Usage + 1) + Safety Stock

​As an example, if the Average Daily Usage for an Item is 5 EA, and you don;t want to fall below having at least 3 EA on the shelf (i.e. Safety Stock), the calculation would be: 5 + 1 + 3 = Par level of 9 EA. If the item is highly variable in its daily usage, you would use the Maximum Daily Usage instead of the Average Daily Usage. In this example, say the Maximum Daily Usage is 12 EA. The formula calculation would be: 12 + 1 + 3 = Par level of 16 EA. The most common failure we see is staff failing to identify and include a safety stock quantity, causing increased likelihood of stockouts, often for items that cost almost nothing, putting "customer service" and clinician confidence at risk for the sake of pennies or just a few dollars.

Par levels must be regularly reviewed and updated, based on changes in usage of each item. In addition, usage of certain items may vary seasonally, and/or selected items are maintained in the Par Location on a "just in case" basis, and when a particular type of patient is admitted, the item is quickly consumed and should trigger replenishment of much larger quantities (e.g. dialysis products).

We can share numerous "hints and tricks" to managing Par Levels. For example, when manual counting is required in replenishing Par Locations, we recommend setting Par Levels in values that are divisible by 2 or even five, and then teaching team members to count 2-4-6-8, etc. or 5-10-15, etc. This adds up to time savings for many items each day, and tends to increase accuracy of counts as well.

We offer expertise to bring science, combined with common sense and years of experience, to implement a comprehensive review of Par Locations, and Par Levels of each item.  We also provide education and tools to implement ongoing reviews by your staff. We recommend implementing a dashboard to track your par locations, par items, and effectiveness of ongoing review and update of Par Levels. This has measurable impacts upon improving customer service, reducing frequency of stock outs, and minimizing inventory investment.