NHS Supply Chain’s response to the NAO Report on ‘NHS Supply Chain and efficiencies in procurement’

NHS Supply Chain welcomes the National Audit Office (NAO) report and its recommendations. The redesign of our operating model supports our capability to implement the report’s recommendations.

We are committed to continuing to work together with the Department of Health and Social Care (DHSC), NHS England and system partners across the country to improve procurement in the NHS, which will be achieved through ongoing collaboration, partnership working and innovation.

Through our quarterly national forums, regional advisory forums, Voice of the Customer Team panels and working groups, we are working with our NHS partners to understand their needs better. This work supports our goals to make improvements in satisfaction with our services.

NHS Supply Chain is aiming to deliver a new savings target of £1 billion by 2030 working together with our NHS partners, suppliers and NHS England. We are adopting NHSE savings methodologies to ensure alignment with how the system recognise savings and it’s expected that this method will be ready for all parties to use to calculate savings from April 2024.

We have embarked on a major transformation programme to upgrade key legacy IT systems. We will need to further improve and integrate our platforms to provide a more consistent experience for our customers and suppliers. As the NAO report highlighted our funding is managed on a year-by-year business cycle in line with NHS England’s business planning process.

NHS Supply Chain is committed to realising its full potential to deliver greater savings and efficiencies alongside a broader value proposition focussing on supply chain resilience, product safety, enabling access to innovation, social value, sustainability and ethical considerations.

Our new target operating model went live on 1 August 2023 and is designed to better meet the needs and expectations of the NHS and deliver greater efficiencies and value for our stakeholders. It supports our vision to make it easier to put patients first and our strategy to buy smart, supply right and partner expertly.

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Notes to editors

All information in this media statement is correct at the time of going to press.

Background

• The previous NHS Supply Chain operating model went live in 2018 following Lord Carter’s report published in 2016 to reduce unwarranted variation in NHS procurement spending, deliver savings and grow market share. As noted in the report, the savings objective to achieve £2.4 billion of savings was achieved.
• The new savings method which will be available for all parties to calculate savings from April 2024 will standardise how cash releasing savings are calculated as well as wider benefits such as increased capability.
• NHS Supply Chain has an established programme being delivered as part of the annual business plan. This programme is focussed on delivering the needs of the NHS through the NHS Supply Chain strategy to unlock £1bn by 2030 and this started in January 2022. 
• To achieve this, NHS Supply Chain has set out to change significant parts of the operation and add new capabilities.  This programme is delivered by the professional change management team under a set of annually funded programmes and governed through Executive sponsorship and formal governance forums.
• NHS Supply Chain reviews, agrees, and receives annualised funding from NHSE to deliver both our operational commitments to the NHS and to develop, maintain and improve the capability of the NHS Supply Chain and must at all times operate within the agreed funding level. 
• Since 2022, NHS Supply Chain has been delivering the operating model programme, integrating the change needed across category management, supply chain and technology portfolios to establish the base for future growth whilst delivering improvements that will support the operation of the NHS.   In 2023, the transition of the category management resources was successfully completed and in 2024 both the procurement processes for supply chain and technology will be progressed to implementation.
• Other early parts of the programme are being delivered including the replacement of legacy technology, service improvements in supplier direct shipment, replacing the northwest regional distribution centre and the digital interfaces used by Trusts to engage with NHS Supply Chain.
• The NHS Supply Chain business plan (including the change elements) for 2024/25 and the onward investment plan will be amended to align with available funding in the summer.

About NHS Supply Chain

NHS Supply Chain is part of the NHS family and manage the sourcing, delivery and supply of healthcare products, services and food for NHS trusts and healthcare organisations across England and Wales.

We manage more than 8 million orders per year across more than 129,000 order points and over 16,000 locations. We deliver over 35 million lines of picked goods to the NHS annually and our systems consolidate orders from over 1100 suppliers. This enables us to bring value to our NHS partners, helping them save time and money in removing duplication of overlapping contracts.

NHS Supply Chain aims to leverage the collective buying power of the NHS to drive savings and provide a standardised range of clinically assured, quality products at the best value.

NHS Supply Chain is committed to enabling the NHS to deliver safe and excellent patient care.

Supply Chain Coordination Ltd (SCCL) is the company at the heart of NHS Supply Chain. It provides oversight and operational management for NHS Supply Chain and its service providers. 

SCCL is the legal entity through which NHS Supply Chain undertakes its procurement services and transacts with customers and suppliers.

Whilst its shares are owned by NHS England, SCCL is a separate organisation.