'Why should we be content with waste and inefficiency on a grand scale?'
Procurement in the NHS is desperately inefficient, a state of affairs which has prevailed for many years. Whilst it can be effective at a local level, the huge number of buying points creates many different needs and processes, which, in turn drive huge inefficiencies into the supply market. Any 'central' procurement delivered so far has been seen as presenting a series of qualifying steps to be allowed into the real market, comprising of the local organisations with buying power. As a consequence, there has been limited strategic market management, a proliferation of suppliers for similar products and no way of tracking the effectiveness of spend. The formation of NHS Supply Chain has only partly addressed these issues as regional procurement hubs serving hospitals in each of the SHA areas were created at the same time. This created three tiers of procurement, each looking to achieve procurement excellence and deliver cost savings. However, the customer did not know whom to use for what purpose.
What is the answer? Most organisations recognise the need to buy at the level at which they can achieve maximum influence in the market. In the case of the NHS, for most circumstances, this would mean at the national level. It is important to emphasise that this aggregation would apply simply to the act of procurement and not to the determination of need. The accumulation of demand should also be operational, rather than strategic, allowing the NHS to optimise the inbound supply chain for cost and sustainability purposes.
An alignment of inbound physical supply chain management with procurement at the maximum appropriate level of aggregation will deliver significant savings to the NHS. However, the only strategic driver for change is placing consolidated orders for committed volumes.
