After covering staffing expenditures, the next major portion of the funds allocated by the NHS go towards the procurement of goods and services. According to estimates by NHS Supply Chain, the NHS collectively spends around £8 billion annually on buying medical equipment and consumables.
With increasing patient demand, inflation, and budget constraints, the NHS is under immense operational and financial pressure, necessitating a growing need for improved efficiencies. Procurement plays a crucial role in supporting the NHS's operations and ensuring high-quality patient care, all while striving to get the best value for money. Consequently, the need for efficiency and effectiveness in procurement becomes even more important.
In this blog, we'll explore how Supplier Management Technology (SMT) can enhance efficiency in NHS procurement, helping the NHS meet its expectations.
What is procurement?
In simple terms, procurement is the act of purchasing goods and services, primarily for business purposes. Although commonly associated with buying, it extends beyond mere purchasing. It is about planning and effective supply chain management, ensuring timely delivery of goods and best value for your money.
In the healthcare sector context, buying is just one facet of the broader procurement process. The entire procurement process involves various activities essential for supporting an organisations' daily operations. These include identifying needs, sourcing, negotiating terms, contract and supplier management, supply chain management, acquiring goods from vendors and its inspection, and comprehensive documentation of each step in the process.
What is NHS procurement?
From medicines and equipment like ventilators and diagnostic machines to protective gear such as gloves, aprons, and surgical masks, a variety of products are necessary for the everyday functioning of the NHS. They also require services like cleaning, facilities management, and IT for their operations. NHS procurement involves the large-scale purchase and acquisition of these goods and services.
While many services are obtained from other NHS bodies, other goods and services are also sourced from the private and voluntary sectors.
Role of procurement in the NHS
Inefficient and ineffective procurement processes could lead to shortfalls or delays in the supply goods and services that are essential to the day-to-today running of patient services. Even a small shortage of bedding, dressings, or cleaning products would lead to a halt in the functioning of patient services. The potential consequences of such a scenario would present significant operational and clinical risks, which cannot be overstated.
NHS procurement professionals not only manage the supply chain within their organisation; they also ensure that goods, services, and suppliers meet consistently high standards for quality, safety and sustainability. This entails strict compliance with regulations, legal requirements, and ethical standards. The primary goal is to ensure healthcare providers have access to reliable and safe products while maximising the value obtained for public funds. This is achieved through negotiating favourable terms, achieving competitive pricing, and seeking cost-effective solutions. Such efforts are essential to optimise the use of NHS funds.
Critical for maintaining a reliable and responsive supply chain, building and maintaining supplier relationships is an essential aspect of NHS procurement. Forecasting needs, identifying cost-saving opportunities, promoting innovation, and other procurement activities contribute to the strategic planning of the NHS. They assist in aligning procurement activities with overall organisational goals, ensuring preparedness for the future, and adapting to the evolving needs of healthcare delivery.
Current challenges in NHS procurement
Instances such as shortages in PPE during the pandemic have not only emphasised the significance of procurement but also highlighted specific challenges within NHS procurement. These instances underscore areas where the NHS may not have been fully prepared for a public health crisis of such magnitude.
In the post-pandemic era, certain geopolitical conflicts have arisen, impacting global shipping, and occasionally causing delays in the supply of medicines.
Budget constraints and a growing demand that surpasses allocated funds are not new hurdles. Due to these, the procurement teams face immense pressure to secure a consistent supply of essential goods and services. They often find themselves in predicament where they must balance cost savings and highest quality products for patient care. Adding to that, economic factors including inflation and price fluctuations bring in yet another challenge into the supply chain and procurement process.
With the NHS's dedication to a Greener NHS and achieving net-zero emissions, there is an additional responsibility for selecting vendors and processes aligned with these initiatives, adding complexity to an already challenging procurement landscape.
Stringent regulations, robust legal requirements, and ethical standards complicate the procurement process, making it difficult to streamline operations.
Features and benefits of Supplier Management Technology
Technology has brought transformation to every aspect of our lives and given the imperative for efficiency improvement within the NHS, it emerges as the obvious solution. Let's delve into some of the key features and benefits of Supplier Management Technology.
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Centralised database
From contact details to contract details and performance data, Supplier Management Technology enables storing and managing all the information about the suppliers in one place. It securely stores essential documents like contracts, certifications, and compliance records, making them easily accessible for audits or reviews. This saves time by eliminating manual searches and allows quick access to all necessary information with just a few clicks.
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Automated procurement processes
Supplier Management Technology has the capability to automate various procurement processes, including order placement and invoicing. This automation can significantly reduce manual efforts and minimise human errors. Furthermore, it can streamline workflows, ultimately enhancing the efficiency of the entire procurement lifecycle.
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Risk management
Supplier Management Technology can help identify potential risks related to suppliers, such as financial instability or quality-based failures, and it assists in proactively addressing them. Taking preventive measures against risks helps avoid disruptions and prepares for unforeseen circumstances, significantly reducing their impact.
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Sourcing, onboarding and contract management
SMT can efficiently streamline the sourcing process with features like identifying potential suppliers, managing requests for proposals, and negotiating contracts, thus simplifying the onboarding of new suppliers. Additionally, it automates and assists in contract management tasks, including notifications and renewals. Moreover, SMT contributes to cost reduction in procurement through enhanced negotiation, improved supplier performance, and optimised inventory management.
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Performance tracking
Supplier management software, which usually has monitoring and analysis tools, allows for ongoing assessment of supplier performance using important measures like quality, delivery time, and contract compliance. This helps ensure consistent, high-quality products and services, maintaining a strong and dependable supply chain.
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Data-driven decision making
Supplier management software supports data-driven decision-making. It leverages stored data and analytics to provide real-time insights into supplier performance, risks, market trends, and procurement patterns. This information helps organisations in making informed choices, optimise procurement strategies, and negotiate better deals. It also aids proactive decision-making, reducing uncertainties in the supply chain.
Navigating new UK Procurement Act with technology
Roughly £300 billion is dedicated to public procurement every year, constituting one-third of public money. Realising the importance of procurement and the need to modernise, UK government introduced the new Procurement Act 2023.
The new act places value for money, public benefit, transparency, and integrity at the heart of the procurement system. Transparency being one of the key objectives, it requires that contracting authorities publish notices. This is not only to support effective competition but also to ensure that relevant information is accessible to the public, providing them with insight into how their money is being spent.
Compliance with new procurement legislation can be facilitated with Supplier Management Technology. SMT enhances transparency through a centralised platform that efficiently tracks and manages supplier-related information. It offers real-time visibility into procurement activities to all the stakeholders. This fosters greater accountability and compliance with regulations.
Additionally, various features of Supplier management software, such as automation, risk management, contract management, and data-driven decision-making, collectively contribute to enhancing the efficiency of the procurement processes and can significantly help in achieving the objectives outlined in the new procurement act.
How Advanced can help you with procurement process?
Advanced Supplier management software leverages technology to streamline supplier management processes including procurement activities. It offers a centralised solution for your supplier management tasks.
Using data analytics, it has the capability to analyse supplier performance, market trends, and procurement data to provide you insights into cost-saving opportunities. Moreover, the software offers customisable, instant, and real-time supplier risk insights to track contract health and help identify non-compliant suppliers. Additionally, it enables a comprehensive analysis of supplier performance, allowing the creation of scoring frameworks and measurement of contract achievements across multiple data points. Users can get a 360-degree overview of supplier performance and leverage qualitative feedback in supplier meetings to drive improvements in outcomes.
With a central document library to store and access important documents like insurance, certifications, and policies, you can ensure regulatory compliance with ease. This streamlined process enables you to adapt effortlessly to changes in regulations and legislation while efficiently managing essential information, such as insurance, policies, and certifications, without the hassle of manual handling. By reducing human errors and facilitating strategic decision-making, it becomes an invaluable tool for ensuring compliance and transparency. This is particularly crucial in light of the new Procurement Act.
Learn more about Advanced supplier management for greater visibility and control over your supplier relationships, fostering strategic collaboration to achieve better commercial outcomes.