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£150m cash releasing savings to be delivered by March 2016

Thursday 27 March 2014

Supporting the Cabinet Office, Department of Health and NHS Business Services Authority’s target of £2bn savings for NHS procurement, the NHS Supply Chain contract is aiming to deliver £150m by March 31 2016.

In meeting this challenge and responding to the shortly to be published Department of Health Guidance for Combating Inflation, we are working in collaboration with our suppliers on joint cost reduction initiatives to:

  • Mitigate price increases
  • Deliver cash releasing savings that can be sustained.

In March 2014 alone, price reductions on exam gloves and paper hygiene products are expected to generate nearly £2m new savings with the potential for many more to follow.

To achieve these savings, the following activity is already underway:

A letter, co-signed by Richard Douglas, Director-General, Finance and NHS, Department of Health and our Chief Executive, Nick Gerrard, has been sent to all NHS Supply Chain contracted suppliers, asking them not to submit price increases and to engage in joint savings initiatives to:

  1. Mitigate price increases
  2. Deliver cash releasing savings that can be sustained over the long term.

In addition to the letter, our buying teams have been contacting suppliers to put in place new joint improvement plans, designed to deliver the incremental savings required not just for 2014 but right through to March 2016.

Currently, 158 new savings opportunities are being worked on with suppliers.

Achievements to date

  • 0% inflation 2013/14 catalogue
  • New savings agreed on two high spend areas being rolled out over March 2014:
    1. Exam gloves – 3% across all lines*
    2. Paper hygiene – 2% on selected lines and suppliers*.

Help us work harder for you

Your NHS Supply Chain account manager will keep you up to date with the suppliers involved and the resultant savings potential. To ensure we are working in the most effective way for you, please keep us informed of your trust’s procurement cost improvement plans. This will enable us to support you with the most relevant insight, resource and expertise and also reduce the potential for duplication when scoping savings opportunities with suppliers.


If you have any questions about the £150m savings target for the NHS Supply Chain contract, please submit them using the form and we will come back to you at the earliest opportunity.

*Average  % saving

Delivering value to the NHS