Supply Chain Management main glossary

This is a glossary of key terms used throughout the site.

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Total health expenditure

The WHO defines total health expenditure as the sum of all public and private health expenditures in a country as a ratio of the total population of that country. Total health expenditure covers the provision of health services (preventive and curative), family planning activities, nutrition activities, and emergency aid designated for health. It does not include the provision of water and sanitation.

Traditional medicine

Traditional medicine refers to all knowledge, skills and health practices based on theories, beliefs and experiences that are indigenous to a culture. These practices may be used to maintain health as well as to prevent, diagnose, improve or treat physical and mental illness.

Treatment episode

A treatment episode is a standard period of treatment during which a patient is given a specific medicine. Treatment episodes are used as a base for comparison in healthcare statistics. They are also an important feature for the forecasting and quantification of medicines, the second step in the supply chain cycle.


VED classification

The VED classification classifies inventory items in a warehouse in categories based on their general importance for the organisation. The categories are: Vital - Essential - Desirable. Vital items are those without which the productive activities such as clinical consultations or surgeries would come to a halt, or at least be drastically affected. Essential items are those whose stock-out cost is very high for the organisation. Desirable items are those whose stock-out or shortage causes only a minor disruption for a short duration and for which the cost incurred is nominal.

VEN classification

The VEN classification classifies inventory items in categories based on their importance for the patients or clients. These categories are: Vital - Essential - Non-essential. Vital items are potentially life-saving or crucial products with a major public health importance. They also contain medicines with a significant withdrawal side-effect. Essential items are those which are effective against less severe but significant forms of disease. Non-essential items are those used for minor or self-limited illnesses. They are the least important items to be stocked. Sometimes a country or an organisation has insufficient funds to buy all the desired medicines. The VEN analysis is a well-known method to help set up priorities for purchasing medicines and keeping stock.

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