Effective Procurement in the NHS and Efficiency Realisation
Procurement today is at the forefront of organisations; procurement no longer sits in the shadows. Over the years I have seen the profile of procurement rapidly increase in many industries, none more so than the NHS. The drive for better procurement, high quality and greater value have never been more important.
The Department of Health and Social Care publish “Procurement Development Programme and Guidance”. This includes e-procurement strategies, increasing transparency, resisting cost inflation pressures, understanding performance and Procurement and Commercial Standards.
Putting this guidance into practice is quite often a much more difficult, even more so with the coronavirus pandemic. Trying to follow guidance and make judgement calls is extremely challenging in todays environment. Therefore, training Procurement to have the right skills, competencies and confidence to do so is important. Taking the lead and implementing this guidance is not something that comes naturally to many however these skills and competences can be taught, (although some would beg to differ!)
Moving procurement through from awareness to excellence takes time, skill and planning. When done well you would imagine that it happens naturally; well you would be wrong, it takes leadership, planning, understanding of organisational stakeholders, processes, and environment.
Using e-procurement strategies is much more than increasing efficiency and purchase to pay. E-procurement enables transparency, for example the collation data across NHS supply chains; Price benchmarking and spend analysis, increasing trust and relationships and inventory management. For this to be successful Procurement needs to ensure their providers are aligned.
Increasing transparency enables greater leverage through economies of scale bringing saving opportunities and improvements in service and quality through increased competition. And what if more SME’s were thrown in the mix, even greater benefits. Over the years we have worked with many NHS Trusts and we encourage the Trusts to work together to share best practice, spend and price analysis……my opening statement is usually “spend a few minutes imagining how your providers would react if all NHS Trusts started working together”. A scary thought, for the providers! Many of the providers charge different prices for different trusts, have different SLA’s and certainly provide a different service. The NHS is ONE, why should each trust achieve different results? I know, you are saying its not that easy. No its not, and that is why procurement can start exploring the opportunities by categorising their spend to see where synergies are.
Start by identifying the leverage and the strategic items, those with high spend and where greater opportunities exist. A useful tool is Peter Kraljic’s supplier/spend segmentation tool:
Resisting cost inflation is another initiative to keep prices from increasing- and this is much more than sending a letter to providers telling them “we will not accept price increases”. This can also include value engineering – working with suppliers to develop fit for purpose products and services that are not over specified in the first instance. This includes not getting complacent about existing specifications and challenging them by conducting a value analysis whereby a product or service is reviewed. I like to use the “5 Why” techniques whereby you ask “why do we need this?”, “why is it here?”, “why so many?”, “why so high”. I have seen many of our NHS Trust Procurement Professionals employ value analysis with some interesting results and for the better I may add. Standardisation can work well here to increase savings, but not in all cases. Buyers must do their data analysis, with increasing transparency across the NHS being helpful here.
All this talk of increasing transparency and resisting costs sounds negative for the providers? Not at all – they should see this as an opportunity to raise their profile within the NHS supply chain. An opportunity for developing partnerships, to showcase new ideas and innovations. Costs saving initiatives could also be beneficial for them too, sharing ideas, forecasts, strategies and innovations can help them align their strategies. This all can be very developmental for providers. Again, to do all this procurement need to start somewhere and need the skills to identify those suppliers and supply chains to begin with.
Measuring performance is essential to all organisations, as doing it well can ensure efficiency, risk mitigation and business continuity. I like to tell my delegates “you are only as good as the weakest link in your supply chain”. Sharing stories of how powerful it is to present a provider with their category’s performance on a spider diagram, the impact it has is eye opening, try it sometime!
Having said this, its not just about measuring suppliers – procurement must be measured too! The NHS Procurement and Commercial Standards offer guidance on how procurement in the NHS should be measured and the standards that should be met whilst offering guidance and support on improving procurement performance and covers 6 key dimensions (Williams Lea for Department of Health and Social Care, 2016).
To improve procurement performance and achieve organisational goals requires procurement training, and more than “how to save money” training. Effective Procurement training brings many benefits to organisation including; mitigating organisational and supply chain risk, effective negotiation which is more effective if the planning stages are undertaken effectively, finding the right source, achieving added value, inventory management efficiencies, reduction of maverick spend, elimination of errors, efficient utilisation of resource, smart objectives, effective problem solving skills. Training provides the individuals at strategic, tactical, and operational levels with the appropriate tool kit and latest innovations to achieve better results.
Barrow, S., 2017. Procurement Transparency, s.l.: Department of Health and Social Care.
Care, D. o. H. a. S., 2018. NHS Terms and Conditions, s.l.: Department of Health and Social Care.
NHS England LTP, 2019. The NHS Long Term Plan, s.l.: NHS.
NHS, 2013. NHS Procurement Dashboard, s.l.: Crown.
PICD, 2014. NHS eProcurement Strategy, London: Department of Health.
Willaims Lea for Department of Health and Social Care, 2016. NHS Procurement and Commercial Standards, s.l.: Crown.
This article was written by Susan Rashid FCIPS, MBA, CPSM, PGCE, Founder & Managing Director of SR Supply Chain Consultants and Co Founder of SR Strategic Sourcing.
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