An Introduction NHS Supply Chain

1. An IntroductionNHS Supply Chain Patrick Johnson 30 April 2007

2. Agenda • An introduction to NHS Supply Chain • The Procurement Process • Working with Suppliers

3. NHS Supply Chain

4. 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

5. NHS Supply Chain Sites • Runcorn, Cheshire • Normanton, West Yorkshire • Alfreton, Derbyshire • Bury St Edmunds, Suffolk • Maidstone, Kent • Bridgwater, Somerset

6. 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

7. 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

8. Governance • Relationship with the NHS managed by the Business Services Authority • Contract contains extensive audit rights • NHS has step in rights for service failure

9. 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

10. Procurement Overview

11. 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 Product Categories

12. 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

13. Product Pricing Strategy NHS SUPPLY CHAIN Supplier Trust 3 Low Volume/Commitment ££££ Trust 1 High Volume/Commitment ££ Trust 2 Moderate Volume/Commitment £££ Differential pricing based on volume and commitment to supplier

14. Procurement – Key Stages Product assessment; market assessment; market research; choose procurement procedures Identify Customer Needs Finalise contract award matrix; define final specifiications; send to all eligible tenderers Tender Development Determine total delivered cost and quality available; compare among tender respondents Tender Analysis Clarify terms and conditions; focus on value for money; develop implementation plans; finalise supplier agreement Issue Resolution/Clarification Determine low best tender based on contract award matrix; involve councils and task forces; make recommendations Decision Making Finalise supplier agreement; draft contract summary; begin contract approval process Finalising the Award Notify all tenderers and customers; develop marketing plan in collaboration with supplier; perform sales training Launching the Agreements Provide legal department with original signed copy of agreement Records Retention

15. 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

16. Product Councils and Task Forces Materials Management Council Perioperative Council Nursing & Clinical Practice Council Wound Management Paediatrics Council Cardiology Council Orthopaedic Council Anaesthesia Council Diagnostic ImagingCouncil Respiratory Council Food Council Laboratory Council Capital Equipment & Facilities Strategic Information Council

17. Working with Suppliers

18. 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

19. Innovation Landscape

20. 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

21. Questions & Answers