Factors involved in computerizing the purchasing and inventory control functions in hospital pharmacies are described. When initiating an automated purchasing and inventory control system, a feasibility study should first be conducted to determine the extent of automation needed to develop a cost-effective system. The design of the system will depend on the extent to which the department of materials management is involved with other hospital departments. The advantages and disadvantages of decentralized versus centralized systems are discussed, and criteria for selecting hardware and software vendors are presented. A return-on-investment analysis should be performed to validate the benefits or savings expected from implementing the new automated system. Factors to consider during implementation of the new system and future developments affecting purchasing and inventory control systems, such as bar coding, are discussed. With the current concern about rapidly rising health-care costs and the need to enhance productivity, the development and implementation of automated purchasing and inventory control systems are important strategies for institutions to pursue now.