An Introduction NHS Supply Chain Patrick Johnson 30 April 2007.

An IntroductionNHS Supply Chain

Patrick Johnson30 April 2007

Agenda

An introduction to NHS Supply Chain

The Procurement Process

Working with Suppliers

NHS Supply Chain

Who is NHS Supply Chain?

A 10 year contract to provide procurement and other supply chain services to the NHS in England

The organisation comprises over 1700 colleagues from:

– DHL

– NHS Logistics

– NHS Purchasing and Supply Agency

– Novation

NHS Supply Chain Sites

Runcorn, Cheshire

Normanton, West Yorkshire

Alfreton, Derbyshire

Bury St Edmunds, Suffolk

Maidstone, Kent

Bridgwater, Somerset

DHL

DHL Logistics:

– Is part of a global group – Deutsche Post World Net

– DPWN employs 500,000 people worldwide

– Employs over 70,000 staff in the UK in over 600 locations

DHL Logistics has a rich history of working in the healthcare sector:

– Management of NHS Logistics’ site in Bridgwater

– Manages significant logistics operations for NHS trusts in London:

• has generated major savings for trusts

• enabled medical staff to focus on patient care

– Works with most of the major technology and pharmaceutical suppliers

Commercial Arrangements

NHS trusts are not obliged to use NHS Supply Chain

Prices will include a margin as they have previously

Cost base transferred from Department of Health for NHS Logistics Authority and NHS PASA; increased by new recruitment

No underwrite of profit for DHL but upper cap in place

Governance

Relationship with the NHS managed by the Business Services Authority

Contract contains extensive audit rights

NHS has step in rights for service failure

Our Vision

NHS Supply Chain will deliver customer-focused, procurement driven supply chain services to the NHS,

enabling health providers to achieve sustainable value, focus on quality patient care and control costs

A target of over £1 billion savings of the course of the contract term

Procurement Overview

Product Categories

Food and kitchen

Print and stationery

Laundry and cleaning

Bedding and linen

Uniforms and clothing

Furniture and office

equipment

Medical supplies

Dressings

Patient appliances

Laboratory equipment

Procurement Overview

NHS Supply Chain aims to:

– Deliver the highest quality products at the lowest total cost to

the NHS

– Use our customers’ purchasing volume to increase market

share for suppliers while decreasing costs

– Provide suppliers of all sizes access to our 600+ customers

– Promote new technologies and innovative products to relevant

customers at the best possible value

– Support supply efforts via marketing and sales programmes

Product Pricing Strategy

NHS SUPPLY CHAIN

Trust 1High Volume/Commitment

££

Trust 2Moderate Volume/Commitment

£££

Trust 3Low Volume/Commitment

££££

Supplier

Differential pricing based on volume and commitment to supplier

Procurement – Key Stages

Identify Customer Needs

Tender Development

Tender Analysis

Issue Resolution/Clarification

Decision Making

Finalising the Award

Launching the Agreements

Records Retention

Product assessment; market assessment; market research; choose procurement procedures

Finalise contract award matrix; define final specifiications; send to all eligible tenderers

Determine total delivered cost and quality available; compare among tender respondents

Clarify terms and conditions; focus on value for money;develop implementation plans; finalise supplier agreement

Determine low best tender based on contract award matrix;involve councils and task forces; make recommendations

Finalise supplier agreement; draft contract summary;begin contract approval process

Notify all tenderers and customers; develop marketing planin collaboration with supplier; perform sales training

Provide legal department with original signed copy of agreement

Product Councils

A key principle of the procurement model is to engage clinical professionals in the assessment process

Key functions will include

– ensuring that all products are assessed using a consistent process

– reviewing and recommending supplier contract shortlists

– analysing financial and non-financial information against an agreed matrix

Each council will meet twice a year and have ongoing contact

A variety of recruitment channels – including NHS Trusts and professional bodies

Product Councils and Task Forces

Strategic Information

Council

Capital Equipment & Facilities

Laboratory Council

Food CouncilRespiratory

CouncilDiagnostic Imaging

Council

Anaesthesia Council

Orthopaedic Council

Cardiology Council

Paediatrics Council

Wound Management

Nursing & Clinical Practice

Council

Perioperative Council

Materials Management

Council

Working with Suppliers

Working with Suppliers

A series of events and meetings with suppliers and trade associations

Ongoing information and updates via the website – including the procurement calendar

Feedback provided on procurement decision making process

Explore the opportunities for new approaches

– marketing and promotion activities

– supply chain reorganisation

Ongoing contact with other organisations in the Innovation Landscape

Innovation Landscape

Summary

NHS Supply Chain will build on existing knowledge, relationships and capabilities

We believe working with other organisations with an interest in procurement a key part of this process

We will implement new pricing strategies driven by customer commitment in order to deliver savings to the health service

There will be new opportunities for suppliers to grow market share

Questions & Answers