SOUTH WARWICKSHIRE NHS FOUNDATION TRUST
TRUST PROCUREMENT STRATEGY (DRAFT)
1. Objective
This is a three-year strategy document and identifies roles and responsibilities, best practice, key
issues and future developments which contribute to the Trust’s overall Business Plan. It includes an
explanation of the general principles of Procurement and the key indicators used to monitor
performance. It also explains the concept of sustainable procurement and the Trust’s general
obligations in this area.
2. Roles and Responsibilities
The Trust has a responsibility to ensure that procurement adheres to principles of transparency, nondiscrimination etc and complies with the EU Public Procurement Directive.
The Director of Finance is the appointed board lead for Procurement in the Trust with the Purchasing
and Supply Manager having a Trust wide responsibility for :
Procurement of goods and services including materials management on Wards and Depts.
Receipt of goods and management of the Works Stores.
Purchasing Dept compliance with Trust SFI’s and EU procurement directives.
Providing specialist advise on procurement matters.
Representing the Trust on National and Consortium Procurement Groups.
(Pharmaceuticals and Capital Works are not part of this responsibility)
The Trust Procurement Group acts as a forum for decision making regarding medical products and
equipment used throughout the Trust. Its remit is to ensure that value for money, clinical governance,
infection control and correct usage are all addressed.
Heads of Department / Senior Managers have a responsibility to be aware of and adhere to :
Trust Standing Orders and SFIs
Scheme of Delegation
Their own level of authorisation.
The Trust Procurement Strategy
3. General Procurement Principles
Purchasing Techniques
The Purchasing Dept understands and adopts general principles and techniques such as
standardisation, consolidation of orders, consortium and national contracting, life time costing,
understanding of supply chain costs, costs of holding stock, negotiation techniques etc. It purchases
in accordance with these principles and will offer advise to all departments when requested.
VFM (Value for Money)
The Purchasing Dept directly manages over £10m p.a. of Trust expenditure and the basic remit is to
obtain maximum value for this expenditure, ensuring lead times, quality and standards etc are all
maintained. A savings target ( cash releasing ) is set and monitored each year, with National,
Consortium and Local initiatives all contributing towards it.
Compliance
The Purchasing Dept adheres to the Trust’s Standing Financial Instructions in respect of Procurement
as well as complying with EU regulations and procedures in respect of Public Procurement. Senior
Purchasing staff understand the basics of contract law and issues surrounding conditions of contract.
Stock
The costs of holding stock in terms of financial investment, space, risk of obsolescence, stock
management etc are well understood and therefore stock levels are generally kept to a minimum.
However recent concerns surrounding Flu Pandemic and subsequent business continuity has led to an
increase in stock levels of certain “critical” items.
Business Continuity
The Purchasing Dept has developed a Business Continuity plan to deal with both internal and external
factors. However the degree of “self sufficiency” of the Trust in respect of Medical Consumables is
naturally restricted by the limited amount of storage space available. The Trust remains heavily
reliant on regular deliveries from NHSSC and other distributors.
User Consultation
This is an important aspect of Procurement and ensures that goods and services meet the needs of
patients and staff. The Purchasing Dept supports the Trust Procurement and Medical Devices Group
as a method of consultation on commonly used medical consumables and devices. It also liases
directly with Clinicians and Dept Heads on individual purchases as well as supporting Consortium
evaluation meetings within the Trust.
4. Sustainable Procurement
With procurement and supply chain factors accounting for 60% of the Trust’s carbon footprint it is
important to implement a sustainable approach to procurement.
“Sustainable procurement is defined as a process whereby organisations meet their needs for goods,
services, works and utilities in a way that achieves value for money on a whole life basis in terms of
generating benefits not only to the organisation, but also to a society and the economy, while
minimising damage to the environment” ( ref. NHS PASA)
The Trust’s aim is to develop and maintain a Sustainable Procurement Policy to ensure that the
goods and services purchased are produced, delivered, used and decommissioned in a safe, ethical
and environmentally responsible manner. To proactively manage associated risks and ensure all
statutory, best practice and control assurance standards are met.
By implementing a policy of sustainable procurement, the Trust accepts the following principles:
1. Purchasing and supply chain activities have a fundamental role to play in environmental and
carbon management, risk management and patient care.
2.
isolation.
3. The Trust has a responsibility to participate in UK government’s sustainable development
agenda, the ‘Greening Government’ and ‘Greening the NHS’ initiatives.
The Purchasing and Supply Manager is part of the Trust’s Carbon Management Team and the
team is aware that procurement in the NHS involves national and consortium organisations as
well as the local Purchasing team. The initial approach therefore is to consider key areas which
the Trust can directly influence:
Adoption of Environment Standards
The Purchasing Dept has already adopted standards for certain products and is aware that the UK
Government has issued environmental standards which the Trust will endeavour to adopt. These
standards can be found on the Defra website under “Buy Sustainable - Quick Wins”. Examples of
standards are listed below:
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Lease Vehicles – 120g/km CO2 or less - for all new lease cars (already adopted)
Refrigerators, Freezers, Washing Machines etc - “A” rated for energy efficiency
(already adopted)
Fluorescent tubes - EU Energy Class “A” (already adopted)
Desktop Computers etc -“Energy Star” standard for low energy consumption.
Timber - Purchase of wood products from sustainable sources, certificates of chain of
custody for the wood fibres certified as FSC or PEFC
The Purchasing Manager will work with the Trust’s Carbon Management Team on the adoption of
product standards and to establish ongoing replacement/ investment programmes for energy efficient
products.
Supply Chain Management
The Supply Chain route selected for incoming goods is a significant factor affecting the Trusts
carbon footprint. Consolidation of deliveries and suppliers significantly reduces the number of
deliveries and vehicles entering the site.
The use of NHS Supply Chain (NHSSC) for over 1,000 different products consolidates much of the
Trust demand into 3 major deliveries per week. This, combined with the fact that NHSSC deliveries
are primarily made “out of hours” (7p.m to 9pm), contributes to a reduction in emissions and traffic
congestion.
The Purchasing and Supply Dept will use the NHSSC supply route as a “preferred” option and will
also, where practical, consolidate other deliveries coming onto site.
The Trust will support NHSSC and OGC initiatives to work with the NHS supplier community to
apply sustainable procurement principles and will work with suppliers to understand the
environmental impact of supply stage activity and encourage innovative improvement in energy
efficiency performance.
Opportunities to reduce waste throughout the supply chain by the re-use, re-cycling or refurbishment
of products and materials will be explored through the Carbon Management Team.
Life Time Costing (or Whole Life Cycle Costs)
The use of life time costing is good practise in procurement and has been used within the Trust for
many years. However while the cost of consumables etc can be easily quantified, environmental
factors have proved more difficult. The need now is find a mechanism where energy, disposal and
other environmental costs can be included in the assessment.
Changes in legislation as part of the Carbon Reduction Commitment mean that emissions from
energy sources will be taxable and legally binding reductions set. For the Trust to manage its future
carbon emissions, identification of reduction opportunities needs to be part of procurement policy
and decisions.
The introduction of environmental costs into life cycle costing will initially be used where there is
significant opportunity to reduce energy consumption both with products and buildings. The
Purchasing and Supply Dept will seek advise from the Carbon Management Team as to the
appropriate environmental Life Cycle Cost calculators.
By adopting this policy the Trust recognises that environmental factors, when significant, can be
used within the selection process.
Contracting
The Trust can choose to adopt Environmental standards in the specification, selection and award
criteria. However care needs to be taken to ensure that the general principles of freedom of
movement, non-discrimination etc and the EU Public Procurement Directives continue to apply.
The Purchasing and Supply Dept will work with the Carbon Management Team to consider ways in
which environmental standards can be introduced into tender documentation and how best to assess
environmental information submitted by tenderers.
As a high proportion of our expenditure is against National / Consortium contracts there is a need to
understand the "Environmental" initiatives being implemented by OGC (Office of Government
Commerce) and NHSSC (NHS Supply Chain) with their contractors.
5. Procurement Systems
The Trust makes over 100,000 individual product line requests per annum. As a result the systems
used to transact that volume of business effects both cost (transaction costs) and our carbon footprint.
The Purchasing and Supply Dept currently uses the following systems:
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Cedar E-Financials POP system for non-stock ordering and stock control. This is a
computerised purchase order and stock control module within the Trust Finance system with
electronic transmission of orders.
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National NHS SC system for Materials Management of ward stocks and Logistics
online. This includes data capture on hand held PDA’s at Ward and Dept level, fully
integrated to the National NHS Warehousing system. It provides a weekly download for each
cost centre into the Trust finance system. This electronic capture and transmission of
demand, combined with electronic invoicing reduces cost and environmental impact.
The planned implementation of Electronic requisitioning, for non-stock items, will further reduce
paper and speed the procurement transaction times as well as providing on-line information for User
Depts. In addition db archive, which stores scanned document images, would remove the need for
storage of Delivery Notes and other paper records.
The Trust will continue to review procurement procedures to reduce paper flow and administrative
workload both internally and for suppliers.
6.
Co-operation
The Trust recognizes the benefit of co-operation with other NHS bodies. It is currently a member of
the Healthcare Purchasing Consortium and uses the services of OGC (Office of Government
Commerce) and NHSSC (NHS Supply Chain).
To ensure successful co-operation the Trust will :
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Share relevant purchasing information with the above organisations.
Share good purchasing practise.
Participate in professional purchasing networks ( e.g. Trust Heads of Procurement meeting)
Provide advise and support to neighbouring Trusts / PCT when appropriate.
The new commercial operating model for the NHS and the subsequent creation of a Commercial
Support Unit (CSU) for the West Midlands will change roles and responsibilities within procurement.
At this point in time the Trust awaits the outcome of these changes to see how they may effect the
Trust Procurement Strategy.
7. Training
The recent DH report “Necessity – not nicety” outlining the new commercial operating model for the
NHS highlighted the lack of commercial and procurement skills. Previously the Cabinet Office has
recommend the use of qualified, professional Purchasing staff within Trusts. This view is endorsed by
the Trust which will ensure that the training needs of Purchasing and Supply staff are met wherever
possible.
Training is currently provided by the NHS PASA Task Force Trainer events (the Purchasing Manager
at SWGHT being a member of this Task Force Trainer team) or via the Chartered Institute of
Purchasing and Supply (CIPS) qualification. The Purchasing Manager is CIPS qualified and one other
member of staff is pursuing this professional qualification.
8. Monitoring Performance / KPI’s
The key performance indicators used have been amended over a period of time to reflect the changing
requirements and processes within Purchasing. They are mainly drawn from the E-Financials
Purchase Order System with any manual collection of data kept to an absolute minimum. KPI’s are
used to monitor added value elements, workload and performance issues within the dept, the service
level provided by NHS Supply Chain and other subjects.
Current key performance Indicators :
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Contract Coverage – measures added value by monitoring expenditure placed against
Contract, Tender etc
Procurement savings – monitors against Trust savings target
Orders sent electronically – measure of system development
Low value orders – monitors reduction against target
NHSSC service level – impacts on stock availability in Trust
Outstanding Requisitions – measures workload within Dept.
In addition the Purchasing Dept periodically issues a User Survey to assess the service provided.
This was last issued December 2008 with satisfactory results.
9. Reporting
The Purchasing and Supply Manager provides quarterly and annual reports to the Director of Finance
on the above KPI’S and other relevant purchasing issues. Information is also provided to the Dept of
Health periodically on OJEU (European Procurement Directive) activity.
The Purchasing and Supply Manager will discuss with the Carbon Management Team any relevant
reporting or circulation of information in relation to sustainability.
10. Key Issues
To continue the introduction of technology in Procurement. The use of hand held PDA’s and the
electronic transmission of purchase orders has helped transact business more speedily, accurately and
at less cost. These developments need to be implemented into remaining areas of Procurement, hence
the imminent implementation of the COA E-Procurement (Electronic requisitioning module).
To support the Trust through the expected reduction in public sector spending, with NHS expenditure
probably reducing in 2010/11. It is important that Trust procurement expenditure be controlled and
managed to meet future income.
To respond to the Carbon Management Agenda, both within the Trust and Nationally. This will
involve the adoption of further standards and changes to process in Trust procurement as well as an
understanding of national initiatives.
To understand and influence the changing structure of procurement within the NHS. To monitor the
performance and costs of organisations such as HPC and NHSSC and to influence their future plans.
Mark Higgitt
Sept 2009