The NHS is the biggest public service institution in the UK, treating one million patients every 36 hours, equivalent to 462 patients per minute. The NHS deals with a vast procurement operation that seeks to deliver on time, and as cost efficiently as possible, medical supplies such as bandages, needles, and syringes.
In 2016 Lord Carter published a report into the NHS, looking into efficiency and how the NHS can improve its operational efficiency, its costs, and leverage its buying powers to deliver greater value to the NHS.
Following Carter’s report, the Department of Health and Social Care established the Procurement and Transformation Programme (PTP) to deliver a new operating model, for NHS Supply Chain, with the aim of delivering savings of £2.4bn by the end of the financial year 2022/23 back to the NHS.
In their keynote address, NHS Supply Chain director of supply chain Chris Holmes and head of logistics James Turpin, discussed the organisation’s vast procurement network, supplying products to hospitals, GPs and other NHS medical institutions. It sources products from as many as 1,000 different suppliers, said Holmes, and although it operates on a £5.7bn budget, he said there was a lack of leverage in procurement spend.
“The NHS should really be the biggest procurer in the whole of Europe, but because of the fragmented nature of the operation it struggles to leverage that scale,” he said. “Lord Carter said in his report that we needed to look at the approach in which we buy, and optimise the range in which we buy, and make sure we give the NHS the best quality of product and the choice it requires. What we have encountered is a proliferation of product that does the same thing, while others may claim it does something a bit better than others.”
NHS Supply Chain head of logistics James Turpin
Previously the NHS adopted a single provider model with DHL managing all of the procurement, the logistics and all the back-office activity. The PTP reshaped the supply chain strategy for NHS Supply Chain, said Holmes, as it split-out a single monolithic model into a procurement operation, internally referred to as Category Towers. All 11 of its category towers enabled them to identify only a small, core range of product with its suppliers, which provided more clarity with its procurement activity.
Turpin emphasised the importance of its warehousing activities to fulfil its supply chain model, with its industrial coverage encompassing seven physical operating sites, with eight operating centres. “All the sites stock predominantly all of the products required for the customers that they serve in that area, which is around 12,000 stock lines in total, and 320,000 non-stock lines at any one time,” he said.
“The [New] Operating Model is in place and we have now transitioned to our new providers,” Turpin continued. “The difficulty we have now is that we have to time everything and deliver it within the next four years. Whilst we are transforming our logistics infrastructure through technology there is also a programme of optimisation. There is also a strategy behind how we move the product around the network, what do we do with our current sites and how we can increase our throughput from 40% to 80%.
“To achieve this we have to look at how we use our infrastructure, our teams and our sheds and ask how we grow the capability from within them and add capacity to the business. This has got to be a network which moves in the same proportion as our growth,” he concluded.
B&Q brand owner Kingfisher, Budweiser Brewing Group, XPO Logistics and Siemens Intralogistics also delivered headlining presentations at this year’s event. Meanwhile, event sponsor Kronos and this year’s Digital Leaders panel also sought to address how the warehouse logistics market can create a workforce that is technologically enabled, leveraging on concepts such as workforce management tools and 3D printing. Warehouse landlord Prologis’ first vice president, project management & sustainability officer Simon Cox also divulged what a sustainable warehouse of the future would potentially look like.
To read all about this year’s key themes from the SHD Logistics Conference 2019 please pick up a free copy of SHD June.