Procurement and Supplies Department Procurement …...Department Team have achieved a CIP of £2,628,054.00 o During the 5-year period 2014-15 and 2018-19, and possibly beyond, the

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Procurement and Supplies Department

Procurement Strategy

Version No. 3

Lead Author’s Name Graham Beck

Lead Author Job Title Head of Procurement and Supplies

Accountable Director Andrew Copley

Effective From April 2015

Revision Date September 2016

To March 2020

Review Date Annually

Next Review Due October 2017

Location of Copies Aire Share / Procurement and Supplies Website

Associated Policies and Procedures

Procurement Policy

Used By ANHSFT Staff

DOCUMENT REVIEW HISTORY

Document review history

Review date Reviewed by Changes Changes Approved by

06/11/2014 John Logue Detail/layout Graham Beck

21/11/2014 Linda Stewart Detail/layout Graham Beck

27/09/2016 Oliver Golledge Updated Standards

Graham Beck

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Contents

Section

1. Executive Summary

1.1 Non-pay expenditure, Quality, Innovation, Productivity and Prevention (QIPP) and Cost Improvement Programme (CIP)

1.2 Shared Procurement Service and the Procurement Team

1.3 Procurement Team performance development

1.4 Procurement CIP

1.5 Procurement Strategy Objectives

1.6 Implementation of the Procurement Strategy

1.7 Periodic review of the Procurement Strategy

2. Introduction

3. Trust Vision, Aims and Objectives

3.1 Trust’s Vision

3.1 Realising our Right Care Ambitions

3.3 Achieving the Vision and Aims: Procurement

3.3.1 Relationships

3.3.2 Quality

3.3.3 Value for Money

3.3.4 Patient Experience

4. Procurement Strategy Action plan (to achieve strategic objectives)

5. The Trust’s Non-Pay Procurement Profile

6. The NHS Procurement, Commercial, Diagnostic and Improvement Standards

6.1 Introduction to the Standards

6.2 Trust Performance against the NHS Procurement, Commercial, Diagnostic and Improvement Standards

6.3 The NHS Procurement, Commercial, Diagnostic and Improvement Standards Action Plan

7. NHS Procurement Dashboard

8. How the Procurement Team Will Support Trust Staff And Projects In Their Procurement Needs

9. Implementing The Procurement Strategy

Appendix 1: Procurement Team/Receipt and Distribution Organisation Structure

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1. Executive Summary The Procurement Strategy describes the actions which Airedale NHS Foundation Trust applies to promote, develop and implement in order to continue to improve our procurement performance. It also demonstrates the Trusts commitment to meeting the demands and expectations of the latest Lord Carter report (operational productivity report), Better Procurement and Better Value, Better Care, DOH Guidance Document Procurement Development Programme for NHS. 1.1 Non-pay expenditure, QIPP and CIP o The Trust expends approximately £32.7m/annum on goods and services

(non-pay expenditure). This comprises 23% of the Trust’s operating cost . o All applicable non-pay expenditure should be subject to QIPP/CIP scrutiny. o 72% of non-pay expenditure (£23.6m/annum) is processed by the

Procurement and Supplies Department Team through established official purchase order contracting and stock systems which are underpinned and supported by strategic and collaborative procurement processes. This expenditure is subject to QIPP and CIP scrutiny.

o 28% of non-pay expenditure (£9.1m/annum) is processed independently of the Procurement and Supplies Department by the Pharmacy Department; this expenditure relates solely to Pharmaceuticals.

o During 2014-15 and 2015-16, the Procurement and Supplies Department supported by the Trusts Procurement working group will work with Pharmacy colleagues to support their future tendering requirements.

1.2 Shared Procurement Service and the Procurement Team o The Trust’s Procurement and Supplies Department provides a Host

Shared Service provision with Bradford District Care Foundation Trust which was established approximately twelve years ago (BDCFT-ANHSFT client-host). The shared service has released significant efficiency savings to the health community since its establishment. The Procurement and Supplies Service also provides procurement services to the local CCGs, and is working collaboratively with Bradford Teaching Hospitals Foundation Trust (BTHFT) and Bradford Metropolitan District Council (BMDC). The collaborative develops joint procurement arrangements targeting benefits and savings from scale. For example, Estates’ plumbing services and parts and electrical services and goods contracts require review and, accordingly, the collaborative is developing a joint procurement plan. Joint-working is also taking place on development of a managed service for agency locums, nursing, admin and clerical staff.

o Bradford District Care Trust contributes £478k/annum to the shared service; the Procurement Team element comprises £230k/annum. The remaining £248k funds the Care Trust’s Receipt, Distribution and Depot, and the Logistics stock team operation (see organisation chart in Appendix-1).

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1.3 The Procurement and Supplies Department Team Performance Developments

o The Procurement and Supplies Department Team has robust procurement

and governance systems in place and provides significant value and assurance to the Trust’s operations.

o The Trust has assessed the Procurement and Supplies Department Team’s performance against the NHS Standards of Procurement and allocated an overall score of 2.07 performance rating. Level-2 performance (achieving transformation requirements) and is consistent with the over-arching transformation milestones provided by Better Procurement, Better Value, Better Health and the Lord Carter review) and the necessary transformation building blocks are in place. The Procurement and Supplies Department aspires to achieve full level 2 compliance on all areas by March 2017.

o An approach to achievement of Level-3 (excelling/outstanding procurement performance) will be communicated in subsequent Procurement Strategy refreshes. Although it must be noted that significant investment by the Trust may be required to attain Level-3. The first priority is to complete the outstanding requirements to achieve Level-2 on all of the standards.

o The Procurement and Supplies Department demonstrates good performance against the new National Procurement Dashboard and is targeting further improvements, e.g. working with Pharmacy and Trust staff to achieve savings from elements of non-pay expenditure not currently processed by the Procurement Team.

1.4 Procurement CIP o Between 2013-14 and 2015-16, The Procurement and Supplies

Department Team have achieved a CIP of £2,628,054.00 o During the 5-year period 2014-15 and 2018-19, and possibly beyond, the

Procurement and Supplies Department Team will achieve further CIPs of £1m/annum. This comprises a further £5m savings target.

o The Strategy provides a rationale for the £1m/annum CIP targets drawn from DOH guidance (Better Procurement, Better Value, Better Health).

1.5 Procurement Strategy Objectives o The Procurement Strategy and action plan identifies Strategic Objectives

to be achieved by 31st March-2017. highlights include:

o Implement the Lord Carter report recommendations - Lord Carter: Operational productivity and performance in English NHS acute hospitals. The report advises that greater savings can be made from procurement best practice, modern procurement systems, managing inventory rather than focussing specifically on price reductions, and procurement departments working better together within Sustainability & Transformation Plan areas (STPs).

o

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o Optimise any potential opportunities by working closely with Pharmacy colleagues on non-pay expenditure through the Procurement Team (appropriate elements).

o Target CIP savings of £1m/annum during each of the next five years.

o Work jointly with Finance and HR to progress to achieve the DOH’s 4% (of non-pay) agency-staff target.

o Strengthen procurement relationships with other Trusts/public-sector organisations.

o Scope health community-wide lead arrangements across provider Trusts for improved joint-working and achievement of efficiencies from scale.

o Further develop the performance of the Procurement Team, consistent with the New National Standards of Procurement (Trust assessment taking place during Sep-16).

1.6 Implementation of the Procurement Strategy The Procurement and Supplies Department is responsible for leading this strategy. The Trust Procurement Working Group, Medical Devices Policy Group, Medical and Surgical User Group, and the Drug and Therapeutics Committee will support the delivery of the Procurement Strategy. Accordingly, the Procurement Strategy actions will be delegated to the Groups for action. Action will include preparation of detailed project implementation plans and milestones commensurate with Strategy completion dates. 1.7 Periodic review of the Procurement Strategy The Procurement Strategy will be periodically reviewed and its effectiveness evaluated to reflect performance improvements achieved and to include new objectives as these are identified. 2. Introduction In 2013-14, the Trust expended £32.7m on goods and services, which accounts for approximately 23% of the Trust’s operating costs (the NHS as a whole spends over £20bn each year which typically accounts for around 30% of the operating costs of each hospital). Effective management of the Trust’s non-pay resource is vital. In totality, the NHS’ purchasing power is greater than any other UK organisation and locally, as well as nationally, NHS Trusts could do more to harness this joint buying power. Fundamental to this approach is: o Ensuring staff are aware of and utilise standardised procurement routes to

acquire goods and services which are fit-for-purpose and offer value-for-money to the Trust and thus the tax-payer.

o Reducing product variation and encouraging use of products from a standardised range which have been quality and value-for-money

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approved, helping prevent different solutions to the same problem with different prices being paid for the same product.

o Accessing national procurement frameworks to secure nationally negotiated best quality and value.

o Increased joint-working within and between Trusts and procurement bodies to better harness NHS purchasing power within the health community.

o Ensuring the capacity and capability of the procurement function, including appropriate resourcing and use of technology; also including e-procurement and integrated financial systems.

Excellent procurement supports the Trust to continue to improve its quality and safety of care whilst maximising value for money. Doing so reduces the Trust’s costs and provides improved patient outcomes. This approach is consistent with the national perspective described within Better Procurement, Better Value, Better Health (NHS England Procurement Guidance). The guidance recommends Trusts stabilise and, where possible, reduce non-pay spending, contributing in real terms to £1.5 billion of procurement savings nationally, with further improvements subsequently. In August 2013, David Nicholson articulated a clear responsibility and vision for procurement in the NHS: “Transforming procurement should be a priority for every NHS Board. Our collective ambition should be for a modern, effective and efficient procurement function in the NHS that is among the best in the world – one that truly delivers taxpayer value, supports innovation, stimulates growth, and most importantly, delivers the highest quality patient care”.

Better Procurement, Better Value, Better Health recognises this is a significant challenge for Trusts and one in which Trusts need guidance and support. Accordingly, NHS England has established NHS Procurement Development Oversight and Delivery Boards and a National Procurement Development Programme. The National Procurement Development Programme will oversee achievement by Trusts of four key initiatives: o Achievement of immediate efficiency and productivity gains. o Actions to improve data, information and transparency. o An initiative to fundamentally re-think clinical engagement in the

procurement of medical devices and the subsequent relationship with the device industry.

o Creation of a new national enabling function to support leadership and build better capability throughout the procurement system, but primarily focused on Trusts’ capability and how they work with procurement partners (the National Procurement Development Programme).

The Trust’s approach to implementation of the key initiatives is described within Section-3 (Trust’s Vision, Aims and Objectives). It is also important that there are strong linkages between this Procurement Strategy, and the Trust’s 5-Year

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Financial Strategy – particularly regarding integrated contribution to the Trust’s Cost Improvement Programme. Finally, Better Procurement, Better Value, Better Health requires executive directors, non-executive directors and Trust boards to play a stronger role in both championing improved procurement and overseeing performance improvement locally. This Procurement Strategy describes the Trust’s approach to achievement of the national and local objectives with a key aim being to embed the procurement priorities within Trust Board and Committee agendas going forward, further supporting delivery of the Procurement Strategy.

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3. Trust Vision, Aims and Objectives 3.1 Trust Vision The magnitude of the challenges facing health and social care is well documented and understood and requires a radical response. We have to think differently if we are going to better meet the needs of the communities we serve, set against unprecedented efficiency challenges. In developing our 5 year Strategic Plan we have risen to the challenge to be bold in the relentless pursuit of our Right Care vision. Right Care is a health and social system-wide approach to care with the patient, around the patient and for the patient. Driven by the needs of each person, not those of professionals or organisations, Right Care wraps itself around the individual in a way that is right for them and makes them feel empowered, active and safe. Care is provided by a range of care providers - dependent upon the needs of the individual - utilising community assets and enabled by technology to both improve the patient experience through a more integrated, right first time offer that makes the best use of tax payer resources. This plan is bold and ambitious and builds on our track record of improving patient experience; delivering low cost, high quality, safe care; driving innovation and integration including providing more care at home; system leadership; effective partnerships; transforming the workforce and strong corporate and clinical governance. Despite our success, we know more of the same will not be enough to achieve what we need to do to guarantee sustainable services. Together with our partners we need to step up a gear and transform at pace and scale if we are to realise our Right Care ambitions over the next five years. We are committed to making the changes that are within our direct control. We will do everything within our power to support, influence, enable and lead (where necessary) the local system. For those changes that are not within our control and sphere of direct influence, we will take every opportunity (including this submission) to lobby for change including alignment of incentives and creation of the right levers and enablers so we can achieve our Right Care vision and deliver sustainable services for our local population.

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3.2 Realising our Right Care ambitions

3.3 Achieving the Vision and Aims: Procurement The Trust’s vision is to achieve excellence in procurement, supply chain and e-procurement solutions with a focus on quality, safety, innovation and best value for money. The Trust’s Procurement and Supplies Department will identify and deliver the right products and services to meet the Trust’s requirements through best procurement practice, innovation and market knowledge. The tables below show how the Procurement and Supplies Department will achieve the Trust’s vision by aligning key procurement objectives to the Trust’s Vision and Aims. The tables also references national and local priorities, particularly Better Procurement, Better Value, Better Healthand the Lord Carter review on variation.

3.3.1 Relationships

National/local priority (Better Procurement, Better Value, Better Care) and the Lord Carter Report

Trust Procurement Objectives

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Lord Carter Report

The report (Lord Carter: Operational productivity and performance in English NHS acute hospitals) advises that greater savings can be made from procurement best practice, modern procurement systems, managing inventory and increased procurement collaboration rather than focussing specifically on price reductions. The procurement recommendations include:

Development of product specifications and a single national electronic catalogue for products used in the delivery of healthcare. The Procurement Team is working with SBS in delivering catalogue solutions to BDCFT for the purchase of goods.

Create national productivity collaboratives around the four categories of workforce, hospital pharmacy and medicines optimisation, estates, and procurement to identify and share best practice. The Procurement Team is registered on the CPE portal (NHS Centre for Procurement Efficiency) and receives updates on the collaboratives.

Increase catalogue lines to 80%

Increase electronic purchase orders to 100% The report currently focusses principally on acute trusts with reference to future work to better support and challenge community and mental health providers.

NHS Procurement Development Oversight and Delivery Boards will be the engine room to ensure all NHS organisations, including NHS England, the NHS Trust Development Authority, Monitor and the Foundation Trust Network, are working to a common strategy for NHS procurement, drawing in private sector expertise and best practice.

The National Procurement Development Programme is leading implementation of the key procurement initiatives. These are described below along with the Trust’s approach to implementation.

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Procurement Initiative-1: Achievement of immediate (and on-going) efficiency and productivity gains.

In 2011, the National Audit Office (NAO) targeted £500m potential savings for the NHS, or 2.5% (from £20bn total non-pay expenditure), by embracing better procurement. The Trust has achieved and continues to implement the following procurement CIPs:

Year

Procurement CIP

achieved (£k)

Status

2012-13 677 Achieved

2013-14 749 Achieved

2014-15 975 Achieved

2015-16 835 Planned

2016-17 1m Planned

2017-18 1m Planned

2018-19 1m Planned

Total 6,236

The Trust aspires to achieve savings of £5m Over the coming five year period. Objective-1 Is to optimise all non-pay expenditure through the Procurement and Supplies Department, increasing exposure to the Procurement Team for increased savings potential. This will be achieved through new policy and improved communication of the requirement to all Trust staff. Practically, this means use by all staff of the Trust’s established purchase order (PO) and stock systems, and direct involvement of the Procurement Team.

The DOH also proposed Trusts should target limitation of agency-staff expenditure to 4% of the total pay bill. During 2013-14, the Trust expended approximately 5% of its annual pay bill on agency staffing. Objective-2 Is to progress towards achievement of the DOH’ 4% agency-staff target. Actions include: o Filling or disestablishing vacancies, as

appropriate. o Improved VAT efficiency of agency staff

expenditure (some categories of agency staff expenditure are VAT recoverable).

o Implement and roll out the HB Retinue managed service contract to include medical locums and nursing staff, whilst improving the efficiency of the staff bank arrangements.

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Procurement Initiative-2: Actions to improve data, information and transparency

Trusts should have data covering over 90% of their non-pay expenditure, across geographies and different business categories. This enables visibility of spend which is essential to understand buying patterns and to forecast supply requirements, enabling the Trust to secure better deals from its suppliers. Objective-3: In addition to Objective-1, the Trust will continue to develop connections between key procurement applications including Oracle, NHS SC, Ascribe and MICAD (Estate Maintenance’ application) to enable preparation of comprehensive expenditure reports which will inform/ensure broader analysis of non-pay spend.

Across the NHS, the essential building block for improving data and transparency for the longer-term is the adoption of GS1 as the supply chain coding standard. GS1 comprises a common global standard which enables Trusts and their suppliers to capture and share procurement data using the same barcode driven technology used by retailers and industry to eliminate errors and waste in the supply chain. Full implementation of GS1 requires the engagement of all NHS suppliers, an initiative currently being progressed by the Procurement Development Programme. Objective-4: To instigate and implement the Procurement Development Programme recommendations and guidance and to prepare, develop, and commence implementation of a board-approved GS1 Adoption Plan. Achievement of the Objective requires clear guidance and policy recommendations from the DOH and Procurement Development Programme Board.

Procurement Initiative-3: An initiative to fundamentally re-think clinical engagement in the procurement of high-value medical devices and the subsequent relationship with the device industry by improving outcomes at reduced cost through clinical procurement review partnerships

The Procurement Development Programme will focus on high-value/high-acuity medical devices within acute hospitals in the first instance. Trust clinicians must also make the right choices, in partnership with Procurement and Supplies, to ensure patients receive

the best treatment and outcomes, including use of appropriate medical devices. However, Trust clinicians purchasing decisions may sometimes be made with a lack of knowledge about costs and prices. Objective-5: The Trust’s Medical Devices Working Group, which includes clinicians and budget holders, will ensure medical device purchases are fully equipped with necessary specification and cost information to help them

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make the right medical device choices both in terms of outcomes for service users and value for money. The Group will also require all such purchases to be transacted through the Procurement and Supplies Department which is an existing Trust policy requirement. The Group will also require a member of the Procurement Team to participate within its activities.

Procurement Initiative-4: Creation of a new national ‘enabling function’ to support leadership and build better procurement capability throughout the system, but primarily focused on Trusts capability and how they work with procurement partners.

The National Procurement Development Programme will engage and support NHS leaders at three levels:

o At national level the Programme will have in place governance for the NHS Procurement Development programme.

o Work with the Royal Colleges to provide a package of support for clinical leaders across the NHS so that they develop greater awareness of procurement and its benefits.

o Work with the Chartered Institute of Purchasing and Supply (CIPS) and the Health Care Supply Association (HCSA), ensuring that all levels of NHS procurement professional are engaged in the development programme.

o At regional or Trust group level, build on existing networks. Procurement Development Networks will be established to encourage Trusts to come together to assess their collective capacity and capability and to build stronger partnerships with their chosen procurement partners such as NHS Supply Chain and the Government Procurement Service.

o At local level, the Programme will provide a package of support for Finance Directors and Non-Executive Directors (NEDs) to equip them with the tools to champion procurement and to hold the Board to account. The Programme will also explore the relevant levers and incentives which may be introduced to ensure this becomes the norm for all Trusts.

Objective-6: The Head of Procurement and Supplies will further develop working relationships and key contacts with the National Procurement Development Programme and co-ordinate the full support of all staff across the Trust for the Programme’s initiatives, ensuring these are implemented within the Trust, as required by the Programme Board.

The National Development Programme clearly states Trusts will need to invest in resources to further develop procurement capabilities. However, the Programme also

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recognises Trusts need support to help deliver truly world-class procurement standards. The National Development Programme has researched many of the leading organisations in both the private and public sectors to determine which of the key, relevant characteristics will need to be developed and embedded across the NHS. These include: o Senior Executive ownership of the procurement

development agenda. Procurement must continue to be an Executive and Trust Board priority.

o Non-executive directors and Trust boards must play a stronger role in championing improved procurement.

o Talent management and development must take place utilising the Trust’s appraisal process.

o Process excellence in strategic sourcing, category management, and supply chain management.

o Key supplier management including the management of supply risks.

o Provision of accurate and timely procurement information.

o Participating in mechanisms for sharing procurement improvements and knowledge.

o The development of meaningful and relevant performance measures.

Objective-7:

o The Head of Procurement and Supplies will be

the key contact with the National Procurement Development Programme and co-ordinate the full support of all staff across the Trust for the Programme’s initiatives, ensuring these are implemented within the Trust, as required by the Programme.

o The Trust should confirm appointment of a board executive director to be accountable for procurement with day-to-day responsibility delegated to the Director of Finance, and a non-executive director to sponsor the Procurement and Supplies Department.

o The Trust will continue to strengthen procurement relationships with other Trusts/public-sector organisations, achieving the collaborative procurement requirements of the Trust and National Procurement Development Programme, and achieving economies of scale from procurement. The Procurement and

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Supplies Department already makes effective utilisation of the Government’s Procurement Service, NHS Supply Chain, and national/regional procurement frameworks, and collaborative hubs.

o Scope Bradford Health Economy looking at potential shared contracting opportunities across provider Trusts, namely it may be appropriate that individual Trusts share lead responsibilities amongst themselves, e.g. one Trust could lead on Receipt and Distribution efficiencies for all Trusts; one Trust could lead on energy/water efficiencies for all Trusts. There may also be linkages with BMDC’s initiative of One Public Estate (e.g. for an integrated R and D/Depot).

o Continue to effectively partner BDCT to further develop the structure and performance of the Procurement Team, e.g. increasing the Procurement Team’s knowledge and experience of infrequent, specialist, and high-value IT procurements. This will further enable the Procurement Team to provide effective procurement support to Trust project managers leading change projects.

o The Trust cannot afford inflationary pressures on its non-pay expenditure if it is to protect and maintain front-line services. The Trust’s Procurement and Supplies Department will expect its suppliers to work with it to reduce costs and prices whilst encouraging innovation and growth. Suppliers will be required to play their part in supporting the Procurement and Supplies Department and Trust with this agenda.

o The National Development Programme clearly states Trusts will need to invest in resources to further develop procurement capabilities, e.g. increased resources in both the Procurement and Supplies Department and Finance may be necessary in response to significant challenges, demands and expectations of this Strategy. A proposed structure and resource plan will be prepared.

3.3.2 Quality

National/local priority (Better Procurement, Better Value, Better Care)

Trust Procurement Objectives

Provide the Trust with fit-for-purpose products and services when it needs them, and at best value for money.

Objective-8: The Trust’s Procurement and Supplies Department will provide fit-for-purpose goods and services to the Trust responsively, achieving Trust CIP and Quality/QIPP requirements whilst also achieving good procurement governance, i.e. SO/SFI and Procurement Regulations compliance.

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Objective-9: The Trust’s Procurement and Supplies Department will protect the Trust and minimise procurement risks through implementation of appropriate managerial and contractual arrangements, ensuring national procurement legal arrangements are adhered to at all times.

Objective-10: Like Facilities, some IT procurements may be infrequent, highly specialised, and high in value. Whilst the Procurement Team must be expert on procurement governance, processes and transactions, certain functions including preparation of infrequent and complex technical specifications, along with identification of associated costs, may require separate specialist resources to be commissioned on an individual project basis, e.g. in the same way Estates commission the services of external architectural and cost advisory services for major capital schemes.

Objective-11: Where procurements are infrequent and specialised, the Procurement Team will recommend to appropriate project managers that independent legal review of procurement documents and independent assurance of their fitness-for-purpose is acquired prior to implementing procurement. The Procurement and Supplies Department will work with project managers to co-ordinate receipt of legal assurances.

Objective-12: The 18-Procurement Standards and the NHS Procurement Dashboard comprise national mechanisms to support continued improvement of procurement functions. From 1st April-2014, the Procurement and Supplies Department is making full use of both tools, which are populated and presented within this Procurement Strategy. 12.1: Update the performance assessments against the 18-Procurement Standards and include within this Procurement Strategy to share with Trust Board/Board Committee, on a quarterly basis. 12.2: Update the NHS Procurement Dashboard and include within the Procurement Policy to share with Trust Board/Board Committee on a quarterly basis. 12.3 Publish appropriate procurement data (see Better Procurement, Better Value, Better Health), including opportunities, expenditure and contracts on the Trust’s website at the appropriate frequency (typically monthly). Publication information includes: o Contracts currently active. o Forthcoming procurement opportunities

including tenders and contract renewals.

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o Monthly expenditure with all suppliers. o Non-pay expenditure over £25K made publicly

available. o Opportunities to supply with a value of £25K or

more are made publicly available.

3.3.3 Value for Money

National/local priority (Better Procurement, Better Value, Better Care)

Trust Procurement Objectives

Stabilise/reduce non-pay spending by 31st March-2016, and beyond.

These are challenging times for the Trust. With service demand continuing to grow the pressure to contain costs is now significant – none more so than in managing non-pay expenditure. Therefore achievement of immediate (and on-going) efficiency gains (Procurement CIP Plan) and delivery of the five year Procurement CIP plans are essential.

Shared Procurement Service: BDCT-ANHSFT: review capacity, competence, and VFM being delivered.

The BDCT-ANHSFT Client host shared service was established approximately eleven years ago. The total annual income to the Trust of the shared service is £478k (the procurement element of this cost is £230k/annum). Whilst the Procurement and Supplies Department focus should target National Procurement Development Programme actions and quality-CIP targets, the Procurement and Supplies Department must continue to meet the demands and expectations of ANHSFT and BDCT. Objective-13: The Procurement and Supplies Department will continue to meet the demands and expectations of ANHSFT/ BDCT by ensuring compliance to the SLA key performance indicators Objective-14: Participate in Procurement Benchmarking exercises, e.g. the NHS Benchmarking Network. Include appropriate KPI performance, e.g. numbers of qualified staff, within the local Procurement Dashboard.

3.3.4 Patient Experience

Procurement must contribute to Achieving Excellence in Procurement through

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4. Procurement Strategy Action plan (to achieve strategic objectives) The Procurement objectives have been developed into a Strategy Action Plan. The Action Plan will be progressed through the Procurement Working Group. The Action Plan will look to deliver the Strategic objectives. The Action Plan is contained within APPENDIX-1 5. The Trust’s Non-Pay Procurement Profile A key objective of the Procurement Strategy is to continue to identify and deliver CIP savings ensuring delivery of the 5 year CIP savings Plan. This will be achieved through the continued use of the Trust’s established CIP Procurement teams, supported and underpinned by NHS SC and various collaborative purchasing routes. The tables and chart below show the Trust’s current non-pay procurement profile for 2015-16. The tables and chart provide visibility of spend which is essential to understanding buying patterns and to forecast supply requirements, enabling the Procurement and Supplies Department to secure better deals from Trust suppliers. The Trust’s Procurement and Supplies Department will make further use of this and supporting information to support preparation and achievement of CIP savings plans going forward. Trust’s Non-pay expenditure profile 2015-16…

the best possible patient experience.

implementation of the Objectives will further support the Trust’s core aim of providing the local community with excellent health care whilst maintaining its competitive advantage to be a Trust of choice.

Category and Non-pay spend 2015-16 (£k)

Supplies and services - clinical £ 11,878.66

Supplies and services - general £ 3,124.17

Research and Development £ 1.00

Transport (Business travel only) £ 421.37

Transport (other) £ 109.36

Drug costs £ 9,179.88

Rentals Under Operating Leases £ 1,608.23

Audit services- statutory audit £ 68.22

Legal fees £ 196.64

Consultancy costs £ 126.41

Training, courses and conferences £ 449.46

Patients travel £ 4.01

Hospitality £ 30.10

Insurance £ 113.37

agency spend £ 5,312.29

NHS Charitable funds: Other resources expended

£ 282.92

Total 32,906.10

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The chart below presents this information graphically.

The chart shows contract and agency staff approximately £5m per annum and clinical supplies and services (£12m/annum) comprising large expenditure categories. Accordingly, the categories will remain a significant CIP focus for the Procurement and Supplies Department. 6. The NHS Procurement Diagnostic, Improvement and Commercial Standards 6.1 Introduction to the Standards The Procurement Standards provide a framework for consistent approaches and practices to improved procurement, delivering benefits across the NHS system. The Standards serve as a useful reference tool for Trust Boards, Heads of Procurement and Supplies Team as they seek to further develop their procurement functions and performance. The Standards are not in themselves mandatory, nor will performance against them be measured by the DOH/NHS England. Each Trust will, therefore, be able to improve its performance against the standards in accordance with its own development agenda. The Standards comprise the following six Domains: 1 Strategy & Organisations

2 People & Skills

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3 Strategic Procurement

4 Supply Chain

5 Data, Systems

6 Policies & Procedures

Each of the Domains contains standards. For example, the requirements of Standard 1.1 are: ● Clearly identified responsibility & accountability for all areas of non pay

spend. Clear understanding of spend which is addressable by the Procurement team.

● Procurement strategy in place and developed in support of the

organisation's strategy. ● Procurement annual work plan agreed.” For each Standard, performance maturity levels have been established. The levels are cumulative, i.e. to achieve Level-2 “Procurement & Commercial Activity Organisation-wide”, the attributes in Level-1 “Procurement and Supplies Focus” first need to have been achieved. The Trust’s proposed approach to achievement of the Standards is described within the table below: Procurement Standards and achievement requirements

Performance Level

Performance Status Deadline for achievement

Level-1: Procurement and Supplies Focus

October 2017

Level-2: Procurement & Commercial Activity Organisation-wide

October 2018

Level-3:

Procurement & Commercial Activity - Internal & External Involvement

No date set

The Trust has self-assessed its performance against the Standards based on the characteristics in the maturity matrix (see Appendix-2: NHS Procurement

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Standards Performance Assessment). Trust performance is summarised below: 6.2: Trust Performance against the NHS Procurement Diagnostic, Improvement and Commercial Standards The Standards assessment tool allows Trusts to set their own aspirational performance level, which are required to be Level-2 as a minimum, although need not necessarily be Level-3 for all Standards. In carrying out the performance assessment, the Trust’s Procurement and Supplies Department recommends the following achievement plan: o o Achieve Level-2 performance by 31st March-2017 (the target date aligns

substantive achievement of the Standards with the savings achievement date for Better Procurement, Better Value, Better Health).

o Having achieved Level-2 performance for all Standards, subsequent Procurement Strategy reviews will recommend an approach to be adopted to Level-3 achievement, i.e. commitment to achievement of all or part of the requirements as appropriate to the Trust. For example, Standard 3.3 requires that contracts are managed, key suppliers are considered business partners, and relationships are suitably managed. To achieve this, Trusts should achieve or follow the principles of BS11000 – Collaborative Business Relationships. At Level-3 inception, a scoping exercise would be undertaken on BS11000 to assess the extent to which this requirement is appropriate to the Trust and, hence, whether the Trust should target Level-3 compliance for the particular Standard. Scoping exercises are also proposed on the extent to which asset tracking technologies are implemented across the Trust along with appropriate investment timescales. In summary, it may be appropriate to target achievement of all or part of Level-3, as appropriate, during the outer-years of the current business cycle.

The Trust’s assessment is, therefore, currently based upon an aspirational score of Level-2 rather than Level-3. However, the assessment provides current performance scores against both Level-2 and Level-3 standards for completeness. The Trust’s assessment results are shown within the tables and chart below: Standards Performance Summary Tables

Breakdown of results

Area Standard Current (16/17)

Target (16/17)

Target (17/18)

1. Strategy & Organisation

1.1 - Strategy 2 3 3

1.2 - Executive Commercial Leadership

2 3 3

1.3 - Procurement & Commercial Leadership

2 3 3

1.4 - Internal Engagement 3 3 3

1.5 - External Engagement 3 3 3

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2. People & Skills 2.1 - People Development & Skills

2 3 3

2.2 - Scope & Influence 3 3 3

2.3 - Resourcing 2 3 3

3. Strategic Procurement

3.1 - Category Expertise 2 3 3

3.2 - Contract & Supplier Management

2 3 3

3.3 - Supplier Relationship Management

2 3 3

3.4 - Risk Management 3 3 3

3.5 - Sourcing Process 2 3 3

3.6 - Benchmarking 2 3 3

3.7 - Specifications 2 3 3

4. Supply Chain 4.1 - Inventory Management & Stock Control

1 3 3

4.2 - Logistics 3 3 3

5. Data, Systems and Performance Management

5.1 - Performance Measurement 3 3 3

5.2 - Savings Measurement & Credibility

3 3 3

5.3 - Catalogue Management 1 2 3

5.4 - Procure to Pay (P2P) 1 2 3

5.5 - Cost Assurance 1 2 3

5.6 - Spend Analysis 2 2.33 3

5.7 - GS1 & Patient Level Costing

1 2 3

6. Policies & Procedures

6.1 - Procurement Policy & Guidance

3 3 3

6.2 - Process Compliance 2 2.5 3

6.3 - Asset Management 1 2 3

6.4 - Corporate Social Responsibility (CSR)

2 2.5 3

6.5 - SMEs 2 2.5 3

Overall Average Score 2.07 2.75 3.00

Minimum Score 1.00 2.00 3.00

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Chart Showing Current Performance

In summary, the assessment indicates that current Trust procurement performance is, between Level-1 and Level-3. However, actions are also required to consolidate Level-1 performance, e.g.

o Compliance with GS1 standards o Asset management systems

The assessment will be periodically updated to reflect performance improvements achieved during implementation of the Procurement Strategy action plan. 6.3: NHS Procurement Standards Action Plan The NHS Procurement Standards performance assessment contained within Appendix-2 forms the basis of the Trust’s actions to consolidate achievement of Level-1 performance, followed by achievement of Level-2. The Procurement Strategy comprises the management tool which will drive achievement of performance improvement to the following timescales: o Achieve Level-2 performance by 31st March-2017 (the target date aligns

substantive achievement of the Standards with the savings achievement date for Better Procurement, Better Value, Better Health).

o Having achieved Level-2 performance for all Standards, subsequent Procurement Strategy reviews will inform of the approach to be used to achieve Level-3 standard e.g. it may be appropriate to target achievement during the outer years of the current business cycle.

7. NHS Procurement Dashboard Current Trust performance against the National Procurement KPIs (1-67 inclusive) is presented below:

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1: Monthly cost of clinical and general supplies per ‘WAU’ (Weighted Activity Unit)

The metric provides a consistent measure of whether a Trusts expenditure per measure of output (WAU) is increasing or reducing. The above chart indicates that the costs of Airedale’s WAU are increasing month on month so far this year. This is because the in-month costs have increased month on month so far this year, however the calculation of the WAU does not have anything that would consider that the activity levels of the Trust also vary each month. This is in line with the guidance on how to calculate the values. For comparison, the national average WAU (based on 15/16 expenditure) was £386, with peer median being £387. Trusts have been issued a 10% reduction target by April 2018, taken from the September 2016 figure. 2: Percentage of non-pay expenditure captured electronically through catalogues

This metric shows the percentage of approved purchase order lines which have been raised by an end user utilising an available electronic catalogue, this does not include free-form requisitions using any other pre-defined or formatted entry (e.g. no smart forms available in Oracle, unless these exclusively use catalogued items). The metric is an indicator of the level of expenditure controlled so as to reduce variation in supply, ensure products bought have been subject to competitive processes and that the procurement process itself is efficient.

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Catalogue lines are increasing and should meet the target which is 80% of purchases to be from an electronic catalogue by September 2017. 3: Electronic Purchase Order by Transactions and Value

This metric provides an indication of the efficiency of the procurement process and the level of control over total expenditure exercised. The % shows the number of transactions and value covered by an electronic purchase order where the purchase order is sent electronically to include e-fax, email but not exchange, email or full end to end delivery/payment process. The current target set is 90% to be via ePO by September 2017.

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4: % of spend on a contract

This metric shows the total percentage of Trust expenditure on a contract compared to the total expenditure of the Trust. The purpose of this metric is to indicate to what extent a Trust is actively influencing its total expenditure across all goods and services apart from exclusions for non-influenced spend. A contract is defined as “an agreement, including frameworks, standing offer to treat, legal contract or similar which has been market tested through a tender or mini competition that contains agreed prices for a set range of products or services for a set period of time. The target is 90% of expenditure by September 2017. 5: Inventory Stock Turns

This metric shows the total level of stock held compared to the number of times the stock is turned over or replaced by new stock. The metric provides an indication of efficiency of capital employed, the supply chain and the risk of stock obsolescence. A lower stock level suggests better stock management and reduced variety of stock held. There is currently no set target. Trusts should compare themselves with their peers and set a target for themselves.

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6: NHS Standards Self-Assessment Score See Section 6.2 (Trust Performance against the NHS Procurement Standards). This metric provides an indication of a Trust procurement operations against a range of nationally set standards and assurance that the operations are fit for purpose. Trusts are to report their self assessment score and may update this following peer review if completed. It should be noted that the SoP can, according to its guidance only be updated once a year. Those that have already achieved Level 1 achieving Level 2 of the standards by October 2018; and those trusts that are yet to attain Level 1 achieving that level by October 2017. All trusts to produce a self-improvement plan to meet their target standard by March 2017 8. How the Procurement and Supplies Department will Support Trust Staff and Projects in their Procurement Needs The Procurement and Supplies Department responsibility is to lead and support Trust staff and teams through the optimum procurement process to achieve the necessary functional and project objectives. Procurement Standard 6.1 requires Trusts to have a published and communicated procurement policy in place which covers all non-pay expenditure. The Procurement Policy includes detailed procurement responsibilities of the Procurement Team and staff to ensure optimum procurement outcomes for Trust functions and projects and describe how this meets Standard 6.1. 9. Implementing the Procurement Strategy

The Procurement Working Group and the Medical Devices Policy Working Group will be key to the delivery of the Procurement Strategy. Accordingly, the Procurement Strategy will be delegated to the Groups for action. Action will include preparation of detailed project implementation plans and milestones commensurate with Strategy completion dates. Further fundamental actions include preparation and agreement of the Trust Procurement Policy reflecting Procurement Strategy requirements, e.g. the requirement for Trust staff to ensure that they use the Procurement and Supplies Department for their purchases, and further progress reporting to Trust Board/Committee. The Procurement Strategy will be periodically reviewed and evaluated to reflect performance improvements achieved and to include new objectives as these arise.

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Appendix 1: Procurement and Supplies Organisation Chart

Structure