Rob Knott on The Future of NHS Procurement

Our good friend Rob Knott, who now works with Virtualstock and was previously National Director, NHS Procurement, has written an interesting article for the HCSA (Healthcare Supply Association) on his perspective of emerging developments in NHS procurement. He is also known for his forward thinking in the co-authored “Better Procurement, Better Value, Better Care” (August 2013), strategy and programme for transforming NHS Procurement.

In this article - “The future of NHS procurement? Look into your procurement strategy, not a crystal ball” - he sets out why he believes NHS Procurement leaders should “dust off their Procurement Strategies and keep themselves at the forefront of the supply chain modernisation agenda.”

To set the scene he explains that non-pay spend across NHS providers is now over £27 billion a year and NHS Procurement has a savings target of £1 billion, of which more than £600 million will be secured by the NHS procurement plans, or, NHS Supply Chain Future Operating Model (FOM) programme. So NHS Procurement has to change if it means to achieve this and maintain critical product and services delivery.

The structure of the future operating model is made up of 11 procurement category ‘towers,’ including 5 medical, 3 capital and 3 non-medical; a logistics provider; transactional services; supporting technology infrastructure and a 200-person strong 'intelligent client co-ordinator.'

One of its key outcomes is to eradicate “a complex, fragmented landscape with internal competition for the range of products, a widespread duplication of effort with procurement expertise spread across the system, and the disaggregation of demand”. But Knott remarks that it will only influence about £5 billion of non-pay spend, leaving £22 billion still on the table. And there has been criticism that the people involved in day-to-day procurement have not been included in discussions.

However, in light of the challenge of the future, Knott gives some recommendations for anyone revising or creating a trust’s Procurement Strategy. He lays out 10 emerging, key developments that are likely to influence the future direction of the procurement and supply chain management function. Just a taste of his visions includes:

Procurement team clusters will be formed - “If a major hospital owns an existing, significant, high performing, procurement and supply chain team, they may be expected to form a ‘cluster’ from which they will deliver a shared service to other trusts … A number of major trusts have also created wholly-owned operating companies (subsidiaries) and it is conceivable that they will absorb many mid-to-back office functions (including procurement) to become sub-GPOs.”

And

Adoption of modern technology will accelerate - the past five years have seen “numerous, notable advancements in procurement and supply chain technology, but the NHS is still too far behind the curve in its effective adoption. NHS trusts must develop radical adoption plans to embrace relevant modern procurement technology at a faster pace. Many leading companies have introduced advanced automation across every aspect of their entire procurement life-cycle. While leading firms are fully exploiting advanced analytics and are now proactively measuring the impact and potential of AI and machine-learning, for example, the NHS has only just deployed a national price benchmarking tool. While reasonable progress has been made in areas such as e-tendering, significant gaps still exist and trusts need to proactively develop an advanced technology strategy and roadmap for their procurement and supply management function. It is recognised that major performance gaps exist in key areas such as catalogue management and purchase-to-pay (P2P) because of the dominance of legacy systems …”

And

The Workforce needed must be world-class – “Professional skills are essential in every key discipline and procurement is no exception. At the heart of every high performing team are high calibre people demonstrating exceptional processes, skills, and competencies. The future focus for the procurement profession in the NHS must be on delivering excellence in category management and supply chain management. Advanced professional procurement skills will also be required in key areas such as commercial management, cost management, supplier relationship management (SRM), risk management, contract management and negotiation. There also needs to be continual investment in a range of core skills including change management (especially facilitation and influencing skills), programme and project management, and financial management.”

And you can read the rest of his predictions on the HCSA website.

Beyond doubt, he says, modern digital technology is going to radically reform the procurement function. There needs to be a new breed of ‘digital procurement leaders’ within the NHS, acting as exemplars across all hospitals in promoting and delivering a modern NHS Procurement.

For anyone still sceptical about the future role of procurement, he believes that in NHS terms anyway, procurement is and will be one of very few strategic functions that can have a positive impact on every product, every service, every supplier and every member of staff, and is critical to the success of running safe, effective, productive and efficient hospitals. Do read his whole, and very insightful article.

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