Supply Chain Management main glossary

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

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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.

Entry link: VED classification

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.

Entry link: VEN classification