Transforming the NHS procurement landscape

Source: NHE May/June 2018

Gerard McGeary, director of strategy & corporate communications at Supply Chain Coordination Ltd, a body set up by the Department of Health and Social Care (DHSC), talks about the incoming changes in the new NHS Supply Chain operating model.

The new NHS Supply Chain operating model (formerly known as the Future Operating Model) is the design of a new supply chain service that will deliver clinically-assured, high-quality products at the best value and support procurement activity across the NHS.

As one of the biggest publicly-funded healthcare systems in the world, the NHS currently spends £5.7bn on everyday hospital consumables, common goods, high-value healthcare consumables and capital medical equipment.

In February 2016, Lord Carter’s report  into efficiency and productivity in the NHS identified unwarranted variation in procurement, resulting in the need to improve operational efficiencies to help transform an already fragmented procurement landscape.

This was to be achieved via the Procurement Transformation Programme (PTP), established by the DHSC to undertake this transformation and deliver a new NHS Supply Chain.

The PTP was tasked to deliver a new operating model, replacing the existing NHS Supply Chain contract with NHS Business Services Authority and DHL Supply Chain Ltd by March 2019. The aim of the new operating model is to ensure NHS needs and objectives are at the heart of the delivery of a new supply chain service.

The new NHS Supply Chain service will reduce unwarranted price variation and work to increase product range optimisation across the NHS, increasing value for money and providing more consistency in both clinical and patient experience.

The new operating model will:

  • Leverage the buying power of the NHS at national level;
  • Realise savings of £2.4bn over five years (from 2015-16) which can be reinvested into frontline services;
  • Increase usage of NHS Supply Chain from 40% to 80%.

In order to minimise impact for customers, implementation of a new NHS  Supply Chain will be via a phased approach throughout 2018-19, helping to provide trusts, suppliers and the current service with time to prepare and continue business as usual.

Once the Category Towers and enabling services are embedded, their strategies will be implemented that will include product optimisation and better value for money.

There are a number of key  benefits  that the new NHS Supply Chain will bring to trusts and suppliers. Providers will be able to channel savings back into frontline services; release more time for clinical activities; increase NHS clinical involvement in purchasing decisions; and introduce new products more effectively.

Suppliers will be able to lower sales and marketing costs; have a single route into the national market; take advantage of a joined-up approach across the NHS; and gain a clear route for innovative products.

Services going live

On 1 April, a new management office went live and is now part of the NHS family. The office will be the central delivery function of the new operating model, driving commercial objectives and overseeing continuous improvement within overall service delivery.

Eleven Category Towers, each having a separate contract with the NHS, will be the category specialist procurement function of the new NHS Supply Chain.

The towers will go live in two phases and work on behalf of the NHS to deliver clinical and non-clinical assured, high-quality products at the best value.

They will do so through a more sustainable approach, including more  rigorous and responsive management of supplier accountability, as well as category strategy development.

Six Medical Category Towers went live on 8 May, joining one of the Non-Medical Category Towers, Crown Commercial Services, who went live in October 2017. The Medical Tower contracts were awarded to DHL Supply Chain Ltd, Health Solutions Team Ltd and NHS Collaborative Procurement Partnership.

The remaining Non-Medical Category Tower contracts were awarded to Foodbuy and NHS North of England Commercial Procurement Collaborative, with the Capital Category Tower contracts being awarded to DHL Supply Chain Ltd and Akeso & Company. These will go live on 5 July.

Logistics will be operated by a single national logistics provider including home delivery service with the warehouses, systems, vehicle fleet and all other assets currently being used by NHS Supply Chain (belonging to the NHS).

Transactional services and supporting technology will initially be delivered using current assets, systems and technology as owned by the NHS. These contracts will be fully operational in early 2019.

The overall aim of the new NHS Supply Chain is to leverage the collective buying power of the NHS to provide clinically-assured products at the best value which meet the diverse needs of NHS organisations, our patients and public.


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