Public sector
25 June 2010

NHS Supply Chain saves trusts more than £200 million

NHS Supply Chain has calculated that it has saved trusts across England and Wales more than £200 million through its operation of the national procurement and supply chain contract. These savings have been achieved by delivering both improved product prices and through efficient supply chain service delivery.

NHS Supply Chain supports the NHS and other healthcare organisations in England and Wales by providing an end to end supply chain solution – it has estimated that it can save a typical hospital up to 10% in product costs if they switch to its lowest priced suppliers. The supply of healthcare products to the NHS was outsourced to DHL at the end of 2006 bringing together parts of what were the NHS Purchasing and Supply Agency (NHS PASA) and the NHS Logistics Authority. Since then DHL has invested heavily in NHS Supply Chain’s infrastructure, IT systems and created more than 800 jobs across eight distribution centres.

“We offer the best value procurement solution, which is especially pertinent during such tough economic times,” says Nick Gerrard, Chief Operating Officer at NHS Supply Chain. “Money can be saved across our 500,000 products which range from bandages to baked beans, from gloves to implants, and even diagnostic equipment such as MRI scanners. NHS trusts can also take peace of mind that the timely and expensive EU procurement regulations have all been complied with, saving on average £40,000 per contract.”

Inefficiency of administrative effort can also waste a considerable amount of money and staff time when ordering products from different suppliers. Through NHS Supply Chain’s streamlined route the amount of paper based documentation is reduced and over 1000 suppliers are managed on behalf of the NHS.

Nick explains: “We lift the administrative load felt by hospitals’ back office functions by combining all items onto a single invoice, this saves up to £1 per item when compared with ordering products separately. And as well as making tangible savings we are helping NHS trusts reduce their carbon emissions by consolidating deliveries which can save up to 40 separate lorries unloading per day.”

Introducing innovative practices has been at the forefront of NHS Supply Chain’s procurement activities to ensure that the most appropriate products are offered at the most competitive price. An example of this is through the use of e-auctions – a competitive online tendering exercise which typically reduces product costs by 15%. Last year NHS Supply Chain conducted 54 e-auctions, one of which for pressure area care mattresses saved more than 66% on rental costs.

To guarantee that its products are not only good value, but also meet today’s healthcare needs, NHS Supply Chain engages with clinicians, the Department of Health and academic institutions during the procurement process; and to maintain the introduction of innovative products into the NHS it has developed a process for pioneering suppliers to enter the supply chain quicker. Over the next six years, NHS Supply Chain aims to create efficiency savings of more than £1 billion; one of the ways it hopes to achieve this is through its Direct from Manufacturer programme which uses direct sourcing strategies for certain product areas.

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