But setting up PARs does not insure a cost-effective system. To remain cost effective, PARs need to be reviewed and modified on a regular basis. Organizations that do this well are practicing another supply chain best practice – managing PAR level locations.

Many organizations do not actively manage their PARs. Changes to PAR locations – normally increases or adds – are most frequently initiated by a request from the clinicians. They may perceive that they are "always running out" and ask for more. Or they may find they are "always calling down for an item" and ask to have it added.

Responding to user requests is a normal part of our role. But changing PARs blindly or just based on user requests is not a good practice. Over time the PAR area can become overstocked. This inflates inventory carrying costs, makes taking inventory more time-consuming, and makes it harder to keep the PAR location in good order.

Managing PAR locations means investigating before increasing or adding items. Managing PAR locations also means proactively reviewing usage on a regular basis to change quantities both up and down and both add and delete items.

Whenever a PAR change is requested, the first step is to review the usage of the item within that department. What is its monthly usage compared to the amount on the PAR times the number of times the PAR is filled in the month? Ideally you should check two or three months to see how consistent the usage is. If the numbers are anywhere close to the same, then an increased inventory is probably needed.

While there is no magic formula for the "right" PAR quantity, a good starting point is a PAR quantity that is 2.5 times the average usage for the PAR cycle. If the PAR cycle is longer than daily, the inventory quantity can be a little lower. This must be adjusted for the regularity of usage – a smaller PAR can support very regular usage – and criticality. You should also check to see if there were any availability issues in the recent past.

Once you have done the investigation the next step is to talk with the requestor to determine the reason for their request. There may be a practice change that is affecting usage. There might be some unusual usage pattern that you could not pick up during your investigation. There could be many valid reasons to make the change.

If, however, the request was due to perception, reviewing the data may demonstrate that the increase is not really needed. Another question that can be answered is the effect of the proposed change on other items. If the increase in use or addition will result in less of other items being used, you may be able to get these decreased or eliminated at the same time.

The same process should be used on a regular basis to check the validity of each PAR level. Each par location should be reviewed at least annually. Twice a year is better for the larger, more active areas. In addition to a full analysis of usage versus PAR quantity make sure you identify those items that are not on the PAR that have been ordered with any regularity. Book some time with the department manager and come armed with your analysis and your suggestions on adds, deletions and changes to levels. Reason and listen to reason as you negotiate changes. Once the PAR changes are agreed to, see how the changes will affect the positioning. You will often have to rearrange supplies to maximize the storage space.

I have one word of caution, particularly for PAR activity that is not self counting. Do not try to shave the PAR quantities too close on low-cost, smaller items. As long as space for them isn’t an issue, keep a somewhat higher PAR so that you do not run out. This does make it harder to inventory – if you are trying to be 100 percent accurate. For these types of items it is usually all right to allow the supply technicians to estimate the on-hand quantities. Just make sure they are accurate in the re-fill quantities.