We listen…

communicate…

focus…

…then deliver

Selection & Implementation of an Integrated Sourcing & Contract Management Solution

Bryan Semple, IT Solutions Director, NHS Supply Chain

Taking Care. Nationwide

Presentation Outline

NHS Supply Chain - Introduction

How?

Implementation Challenges

Why?

Business Benefits

NHS Supply Chain Opts For An Integrated End-to-End Sourcing and Contract Management Approach – Why and How?

Who Are We?

• NHS Supply Chain is the integration of NHS Logistics, part of NHS PaSA and DHL

• DHL appointed 1st October 2006 to manage NHS Supply Chain on behalf of the Department of Health

• Global Organisation

• 500,000 employees

• Express, Logistics, Mail and Financial Services

• Healthcare sector in the UK [Bridgwater DC and Hospital Logistics]

• Life Sciences – Global Pharma and medical companies

• 320 employees

• Sourcing and Contracting entity on behalf of the NHS

• Originally all Non Pay Spend

• Specific to Utilities, Pharma, Agency and Services

• Civil Service culture

• 1500 employees

• Built an infrastructure and capability around NHS Supplies organisations

• Dedicated purchase to pay systems and online ordering

• 6 Distribution centres

• Transport Network –outsourced to CEVA

• Unison Membership

Our Vision & Value Proposition

We aim to be the best value, and most innovative, healthcare supply chain for the NHS

Private homes

Nursing hom

esOur span of influence and control

DistributionCentres TrustsConsolidation

SupplyCentre

Sourcing &procurement

Raw

mat

eria

ls pr

oduc

tion

E-commerce

Supplier ServicesProcurement Services Logistics Services Supply Chain Services Patient Services

C5bn Market11 TFR3 Categories

Incl Theatres, Medical/Surgical, Clinical Markets, Food & FacilitiesCapital Equipment & Maintenance

Logistics Services

ServicesUtilitiesEstatesPharma

Agency ServicesTransport

How have we evolved?Our Market

• NHS Supply Chain has exclusive scope from the DoH that covers over £5bn of market. This represents 28% of NHS Non Pay spend*

*Pharma accounts for 57%

NHS SC Networked and Transacted

Legacy PaSA Frameworks and Direct contracts

Available Market –New Categories

1bn

0.6b

n3.

3bn

5bn

Market Current Profile

Complex Procurement Landscape

NHS procurement in

practice

NHS Trusts- provision of services and related purchasing -

Departmentof Health

- strategy and funding -

CollaborativeProcurement

Hubs- cost efficient

procurement at regional level -

Centre forEvidence Based

Purchasing-clinical evidence

gathering -MHRA

- product regulation and safety -

NICE- cost and clinical effectiveness -

NHS Institute- disseminatinginnovation and best practice-

NHS PASA- pricing and procurement -

NPSA- monitoring and

improving patient safety -

Savings – Business Case & Actual To Date

• Generating savings for the NHS is at the core of our business plans.

• We are committed to delivering over £1bn savings over the 10 years of our contract− Cash releasing savings of £9m in year 1 [Target 1m]− Cash releasing savings forecast in year 2 – £18m

[Target 5m]

• We procure once only on a national scale, leveraging NHS buying power − Audiology - £25,000 annual cash savings per trust− Imaging & Diagnostic capital - £14m savings for

NHS forecast in 2008

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 20160

150

300

450

600

750

900

1,050

1,200

1,350

1,500

1,650 BC NHS Savings

Actual NHS Savings

2007 2008 20090

20

40

60

80

146

~~~

9m16m

IT Enabled Business Transformation

BUSINESS TRANSFORMATION

• DHL has invested over £25m in the first year of the contract

− People and Training

− IT Infrastructure & Enablers

− Process re-engineering

• Continue to invest in 2008 / 2009

− New Infrastructure

− IT Change programme

− Capital Managed Services

− New Category development

IT ENABLERS

• Catalogue Management / eCommerce Upgrade

− Move from 50,000 to 650,000 products

− Catalogue Enrichment

− 33 million order lines pa across 250,000 requisition points and growing

• Legacy Systems Replacement

− RESUS over 20 years old

− Constraint on new business services (e.g. HDS)

− Lack of operational effectiveness and efficiency

• Business Intelligence and Data Management

− Data Quality

− “Actionable Insights” for suppliers and customers

Transforming Procurement – Key Challenges

People

Process

SystemsData

Market Info

Suppliers

People

OUTCOME• New organisation aligned with business imperatives• Commercial training for all• Clear management goals and incentives• Still some way to go!

CHALLENGES• Inherited 80+ personnel from NHS PaSA• Recruited another 30+• Organisation structure not aligned with business• Mixed culture (“let and forget”)• Commercialisation• Training

People

Process

SystemsData

MarketInfo

Suppliers

People

Process

Systems

Data

MarketInfo

Suppliers

Processes & Systems

OUTCOME• Single end-to-end Way of Working for all core processes• One system with flexibility and rules to drive consistency• Building in and improving best practice, template driven• Management dashboards and alerts to drive performance resource balancing• Fully hosted and managed solution, minimising investment and increasing flexibility• Increased use of eAuction, driving additional benefits

CHALLENGES• OJEU Compliance• Lack of consistency across teams• Fragmented systems barrier to process integration• Lack of overall ownership• Cost of multiple systems and hand-offs• Lack of management visibility of activity and

resources• Limited use of eAuctions due to cost and

complexity

Data

OUTCOME• Contract, Price and Product Data captured once at Tender stage• Catalogue populated directly from Contract information• Contract Lifecycle Management - Integrated change control• Alerts, warnings and workflow

CHALLENGES• No single source of data

− Core systems supplemented by > 1000 MS Access databases

• Change Control − Lack of discipline in keeping products, contracts,

contacts and prices up to date

• Poor Quality− Multiple manual rekeying, cut and paste− Lack of supplier visibility

• Speed (lack of)− Weeks to upload and validate contract information

and populate catalogue

People

Process

SystemsData

MarketInfo

Suppliers

Market Intelligence

OUTCOME• Sophisticated data scrubbing and spend analysis tools providing additional

insight to wider NHS market• Identification of gaps and opportunities for additional contract• Monitoring of uptake and non-compliant spend • One version of the truth

CHALLENGES• Limited understanding of wider marketplace• Lack of visibility of existing contract spend• Poor uptake and compliance management• Limited business case development support and

benefits tracking• Multiple interpretations of same data leading to

poor and inconsistent decision making• Limited manual spend analysis capability

People

Process

SystemsData

MarketInfo

Suppliers

Supplier Management

OUTCOME• Single supplier portal for all tender and contract management activities• Workflow and alert management integrated with contract lifecycle• Integrated view of supplier and contract performance for supplier and buyer

CHALLENGES• Fragmented communications channels• Inconsistent mechanism for responding to

tenders and completing responses• Lack of total visibility of supplier performance• No coordination of supplier and buyer activities • Limited supplier visibility of tender pipeline

People

Process

SystemsData

MarketInfo

Suppliers

Solution Selection and Implementation Timescales

• Jan-March 2007 Requirements Definition & Short listing

• April-May 2007 Conducted user workshops and gap analysis

• Jun-Aug 2007 Conducted trials and Blueprint validation exercise

• Sept 2007 Commenced project and detailed design phase

• Mar 2008 System delivered and testing completed

• Apr-Jun 2008 Data migration, training and system configuration

• 30 Jun 2008 Go Live

• July-December 2008 Tender Launch, Coaching and Contract Conversion

• We applied a rigorous and thorough process to our selection of Intenda which had to satisfy both NHS and DHL policies.

• We ran workshops, conference room pilots and even some live trial events, including an eAuction for Baked Beans!.

• Intenda were the only company able to demonstrate a full end-to-end tender and contract management solution and who had a thorough understanding and hands-on experience of OJEU and government procurement

Benefits and Remaining Challenges

KEY BENEFITS• Full OJEU compliant end-to-end solution covering full procurement lifecycle

• Reduced manual effort to set up and execute tenders

• Fully integrated contract management and workflow

• KPIs and performance information

• Integration with NHS-CAT, ensuring data integrity

• Fully hosted environment with minimised investment in hardware and software

REMAINING CHALLENGES• Ongoing coaching and standardisation of ways of working through tender lifecycle

• Outstanding data quality issues with legacy contracts

• Continuous improvement and increased productivity

The Future - Managed Procurement Services for Trusts

Hosted Procurement ServicesOn Demand

• Provides a hosted solution for single tenders and procurement events only

• Consultancy support provided by Intenda to set and manage events

• Access to OJEU compliant, governed and best practice tender management for ad hoc major tenders by “non member” bodies

• E.g. Hub bulk IT capital purchase for member trusts, not covered by existing NHSSC or regional contracts

Hub & Trust Sourcing and Contract Management Solutions

• Uses shared infrastructure to provide a complete ISS environment covering all aspects of Sourcing and Contract Management (not eProcurement)

• A Separate instance will be set up for each “client” based on the standard NHS Blueprint and environment

• Customisation to this environment at individual trust cost. Major rework will require a separate instance and higher costs

Trust/Hub Advantagesn Significantly lower cost of entry and running costsn Uses standard template and processes proven within NHS environmentn Access to best practice advice and experiencen OJEU compliance/Governancen Efficiency of tendering and contract management activityn Visibility of spend and customer requirements

Contact Details

For further information on the use of ISS at NHS Supply Chain contact

Herman FickManaging DirectorT: 0845 4683632 E: herman.fick@intenda.net

Bryan SempleIT Solutions DirectorT: 01773 724000E: bryan.semple@supplychain.nhs.uk