procurement strategy - 2021 · procurement strategy may 2018 – april 2021 1 introduction this...

DOCUMENT CONTROL:

Version: 3

Ratified by: Finance, Performance and Informatics Committee

Date ratified: March 2018

Name of originator/author: Head of Procurement and Purchase Ledger

Name of responsible committee/individual:

Executive Director of Finance and Performance

Date issued: 25 April 2018

Review date: March 2021

Target Audience All Staff

Procurement Strategy 2018 - 2021

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CONTENTS

SECTION PAGE NO

1. INTRODUCTION 3

2. ROLES AND RESPONSIBILITIES 3

3. BACKGROUND 4

4. OBJECTIVES 9

5. SUSTAINABLE AND ENVIRONMENTAL PURCHASING 10

6. MODERN SLAVERY AND HUMAN TRAFFICKING ACT 11

7. E-PROCUREMENT 12

8. PROCUREMENT RESOURCE 12

9. SUMMARY 13

10. TRAINING IMPLICATIONS 13

11. MONITORING ARRANGEMENTS 13

12. REFERENCES TO OTHER DOCUMENTS 13

Appendix 1 – Key Deliverables 14

Appendix 2 – Swot Analysis 18

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ROTHERHAM DONCASTER AND SOUTH HUMBER NHS FOUNDATION TRUST

PROCUREMENT STRATEGY

MAY 2018 – APRIL 2021

1 INTRODUCTION

This strategy is designed to ensure the purchase of goods, works and services required for the Trust is handled in a transparent, timely and cost effective manner with due regard to purchasing best practice. Procurement is one of the key functions responsible for ensuring all goods and services that are procured by the Trust:

Represent best value and appropriate quality

Are Market tested to ensure best value

Are protected by a legally enforceable contract.

Have been purchased in compliance with the Trusts SFIs and Public Sector Regulations.

Procured from the most sustainable resources The underlying purpose of this strategy is to positively influence procurement throughout the Trust, supporting Care Groups and Corporate Services to deliver high quality healthcare to patients through a philosophy of best value and best practice. It has been developed to address the total supply chain and:

Provide a strategic vision and priority for initiatives for the next 3 years

Is flexible to meet the ever changing needs of the local health community and the wider NHS

Satisfies legislative compliance and public sector policy including current EU regulations

Will actively contribute to Non-Pay Efficiency Savings targets set for the Trust.

Will actively seek to reduce the Trusts burden on the environment through various means such as locally sourced goods, procuring only energy efficient appliances and working with suppliers to reduce packaging.

2 ROLES AND RESPONSIBILITIES

The Chief Executive has overall responsibility for the maintenance and implementation of Trust Strategy Documents The Executive Director of Finance is the Board Level lead responsible for the implementation of the strategy.

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3 BACKGROUND

For the Year 16/17 the non-pay spend was £38.5 Million, spent across 1755 suppliers, 37% of which was covered by purchase Orders. Areas of non-pay which aren’t typically covered by POs are, Utilities, rent, purchased healthcare and mobile phones but there still is a significant gap where POs can and should be raised.

Total expenditure by Care Group for 2016/17:-

Non Purchase Order Invoices, 62%

Against Purchase Orders, 38%

Breakdown of Non-Pay Expenditure (£38.5 million)

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Expenditure by Expense type 2016/17

Top Relevant Spend by Supplier 16/17 Below is the top spend with Non-Healthcare providers for 16/17. This is to give a true reflection of Procurement influenced spend:

Supplier Name Category Spend (£)

PULSE Agency 3,073,207.73

Albion Healthcare (Doncaster) Limited PFI 2,993,669.65

NHS SUPPLY CHAIN Consumables 1,983,171.40

NHS Business Services Authority Drugs 1,018,703.36

DELL CORPORATION LTD Computers 756,784.86

Channel 3 Consulting Ltd Consultancy 728,565.60

RACEWAY BUILDERS LTD Estates 532,710.96

CANON (UK) LIMITED Photocopiers 454,191.40

Corona Energy Retail 4 Limited Utilities 445,065.92

Sanctuary Personnel Ltd Agency 430,867.27

Sugarman Group Ltd Agency 405,515.42

SOFTCAT LTD Software 378,004.63

Reed Specialist Recruitment Ltd Agency 376,134.66

Connection Recruitment Limited Agency 370,710.42

EDF ENERGY CUSTOMERS PLC Utilities 356,246.24

Alphabet (GB) Limited Vehicle Lease 292,802.51

3 BUSINESS SERVICES Utilities 269,321.69

VODAFONE CORPORATE LTD Utilities 267,763.96

Meridian Business Support Agency 252,152.56

Lloyds Pharmacy Ltd Drugs 244,947.71

Others (1,570 Different Suppliers)

24,633,428.65

Grand Total

40,198,103.58

The majority of this spend is covered by the Crown Commercial Frameworks (in blue) and is procured via either a process known as a mini completion which includes all suppliers on a particular lot of the framework or by Direct Award where

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the market is limited, for example specialist IT Consultants. The rest of the spend is covered by tender processes following internal SFIs. All suppliers are subject to robust contract management throughout the life of the agreement both at local level and via the National frameworks.

NHS Supply Chain There is a significant spend with NHS Supply chain, this is mainly on consumables. Work is undertaken with Supplychain to ensure products used are suitable and subject to regular benchmarking. Trials are undertaken on high volume items to ensure the best value for money is being achieved and the quality is suitable. NHS Supplychain are entering a new phase of sourcing and supply this is called the Future Operating Model (FOM) this will enable better value and choice for smaller spend Trusts, ensuring the same price for all.

PULSE, 3,073,207.73

Albion Healthcare (Doncaster) Limited,

2,993,669.65

NHS SUPPLY CHAIN, 1,917,308.38

NHS Business Services

Authority, 1,018,703.36

DELL 756,784.86

Channel 3 728,565.60

RACEWAY BUILDERS LTD, 532,710.96

CANON (UK) LIMITED, 454,191.40

Corona Energy 445,065.92

Sanctuary Personnel Ltd, 430,867.27

Sugarman Group Ltd, 405,515.42

SOFTCAT LTD, 378,004.63

Reed Specialist Recruitment Ltd,

376,134.66 Connection

Recruitment 370,710.42

EDF ENERGY 356,246.24

Alphabet (GB) Limited, 292,802.51

3 BUSINESS SERVICES, 269,321.69

VODAFONE 267,763.96

Meridian Business Support, 252,152.56

Lloyds Pharmacy Ltd, 244,947.71

Spend by Supplier

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Provisions 72,748.14

Welfare Foods 0.00

Staff Uniforms 15,490.52

Patients Clothing 39,893.21

Drugs 0.00

Dressings 1,016,703.10

Medical / Surgical Equipt. 420,779.68

Patients Appliances 24,574.52

Lab Chems. & Reagents 9,650.74

Hearing Aids 1,286.68

Dental & Optical Equipt. 2,088.52

X-Ray Equipt. & Materials 0.00

Lab Instruments & Equipt. 29,872.94

Fuel, Light & Water 0.00

Laundry & Cleaning Materials 181,573.31

Mech. Service Equipment 0.00

Electric & Electronic Items 0.00

Specific Purpose 148.83

Raw mats, Tools etc. 0.00

Gardening & Farming Materials 0.00

Furniture & Fittings 1,247.42

Hardware & Crockery 12,578.46

Bedding & Linen 40,994.11

Office Equipt. & Stationery 113,571.22

Ophthalmic consumables 0.00

Misc 770.00

1,983,971.40

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National Agenda & Priorities The Department of Health (DH) have launched a suite of strategies, guides and resources in recent years: 1. E- Procurement Strategy - (NHS e-Procurement Strategy, 2014) 2. NHS Procurement Standards - (NHS Procurement Standards, 2013) 3. NHS Procurement Dashboard - (NHS Procurement Dashboard, 2013) 4. NHS Procurement Transparency - (Procurement Transparency, 2014) These have now been underpinned by a supporting Centre for Procurement Excellence (CPE) with the DH. The CPE are focusing on supporting Trusts with the following priorities:

Board level recognition and sponsorship of Procurement

Executive authority and influence

Organisational alignment

Category management and sourcing strategies

Supplier Relationship Management

Risk management

Operational Process Management

Performance management

Data, information and knowledge

People strategy

Excellence in governance, planning, programme and change management

This strategy aims to address the areas identified as priorities by the CPE. The strategy objectives and actions have been designed to align with the DH guidance and fall within 4 main themes.

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A. Leadership B. People C. Partnership D. Process

4 THE OBJECTIVES OF THIS PROCUREMENT STRATEGY

The following principles underpin the strategy and will be applied to all purchasing activity conducted on behalf of the Trust. Patient Care – Products and Services will be purchased which will be supportive of the clinical care within available resources consistent with the Trusts clinical governance, health and safety and other policies. Best Value – Procurement activity will be conducted to ensure that best value is attained and this should take account of not just purchase price but whole life acquisition and process costs. Reduction in the use of Single Quote Waivers – Goods and services will be market tested quickly and efficiently to ensure value for money is obtained. Users will be encouraged to approach the Purchasing Department for all procurement over the Trusts Tender/Quote financial limits. Currently the trust averages around 45 single quote waivers per annum, we will be looking for a reduction of at least 50%. Procurement Savings – Purchasing will contribute significant savings towards the Trusts efficiency saving targets. Targets are set in areas of high spend annually. The non-Pay Workstream will take place monthly to identify key areas of spend to be targeted, Members of this group will included key individuals from both clinical and corporate areas. In 17/18 over £300,000 savings were achieved with a view for a further target of over £200,000.00 in 18/19 Collaborative Purchasing – The Trust will work collaboratively with other health bodies in order to maximise its purchasing power and to optimise its operating costs. This will include the use of National Frameworks (Crown Commercial Services/ Department of Health) and other joint contracts and the services provided by NHS Supply Chain. Networks will be formulated with other Trusts to achieve economies of scale on various commodities/services. Usage data for high spend items will be shared with NHS Improvement to compare and contrast with that of other trusts to ensure price consistency nationally. Selection of Products/Services – In selecting goods and services to be used, Purchasing will generally adopt generic specifications, promote standardisation and rationalisation and ensure that product/service users are appropriately engaged on the procurement process. Environmental Consideration – in the selection of goods and services Purchasing will take into consideration the environmental and carbon impacts

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associated with the product, and wherever possible aim to reduce the impact to a minimum. Suppliers – Purchasing will work in partnership with its suppliers, develop long-term mutually beneficial relationships, promote innovation and technical advancement wherever appropriate and will be seen to reduce the number of suppliers where possible. Work closely with SMEs to ensure they are able to participate in the Trusts procurement processes. Usage and Disposal of Products – The Trust will promote the efficient use of products recognising that overall expenditure is significantly influenced by the effective management of demand as much as the purchase price paid. Promotion of the reduction of waste associated with the use and disposal of products. Purchasing and disposal of waste will be in line with WEE regulations. Purchasing Cards – are used to process low value and specialised overseas orders to reduce both process cost and time. NHS Standards in Procurement – RDASH Procurement to work towards a minimum Level 1 accreditation within the next 3 years. Other major components of this strategy is the continued modernisation of the ‘purchase to pay’ cycle and increased economies of scale through the collaboration with partners with the local area particularly the Trust involved with the Working Together Programme.

5 SUSTAINABLE AND ENVIRONMENTAL PURCHASING Sustainable Procurement – Purchasing will ensure that all goods and services purchased throughout the trust take into account all Central Government and Department of Health commitments to Sustainable Policies. One of which will be done by investigation into the greater use of products manufactured from recycled materials. Work will continue with the Trusts Environmental Manager to reduce our carbon footprint. The benefits of this will be that the effective use of sustainable resources to ensure future supply at affordable rates and help improve the nation’s health and wellbeing. Environmental Procurement – Whilst complying with EU rules and domestic policy governing public procurement Purchasing will ensure that they will:

Integrate environmental considerations in purchasing procedures in accordance with Government and EU guidelines.

Specify and exercise a preference for environmentally preferable products that offer value for money

Take account of whole-life costs in the evaluation of tenders, wherever practical

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Reduce the environmental impact of purchasing and supply activities by reducing paper flow through the procurement process, avoiding replication and minimising the administrative burden on suppliers

Work in partnership with other government purchasing organisations and service providers, especially those operating in the local community

Ensure our purchasing and supply activities contribute positively to the Trusts overarching environmental policy.

Explore ways of measuring the environmental and carbon impacts associated with procurement to enable the Trust to further reduce its carbon footprint.

In respect of the efficient use of materials, our aim is to minimise the consumption of finite natural resources and to minimise the quantity of waste being sent to landfill sites. Therefore, as general design principles, we seek the following where commercially viable (in accordance with the waste hierarchy):

efficient design and stock control to minimise the use and waste of materials;

re-use and refurbishment of existing infrastructure, equipment and materials;

use of reclaimed products and materials;

use of renewable materials from legal and sustainable sources (such as timber with appropriate certification);

Waste minimisation at source, i.e asking for goods to be delivered with minimal or no packaging;

waste minimisation on-site;

recycling of construction, demolition and excavation waste; and

procurement of products and materials with good practice levels of recycled content (relative to other products meeting the same specification).

locally sourced goods, wherever possible.

These objectives should be pursued while avoiding adverse impact on cost, quality or other requirements in this brief.

6 COMPLIANCE WITH MODERN SLAVERY AND HUMAN TRAFFICKING

ACT 2016 – SUPPLY CHAIN TRANSPARENCY Section 54 of this Act requires all organisations to set out the steps the organisation has taken during the financial year to ensure that slavery and Human Trafficking is not taking place in any of its supply chains, and in any part of its own business. Our obligations under this Act in relation to our supply chain, are: To ensure Procurement identify and prioritise high risk areas in the supply chain by utilising guidance and resources where available, Seek confirmation from our suppliers that they comply with the act.

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Ensures all Tender, quotes and contract documents to include an obligation for our suppliers to comply with the Act That procurement staff are aware of the Act, its provisions and its expectations and utilise accordingly.

7 E-PROCUREMENT

The Trust has implemented a fully integrated purchasing system by which users order goods and services electronically, and approve invoices. Introduction of this system has significantly changed not only the working practices of the Purchasing Department, but the Trust as a whole, enabling users to instant requisition, clearer visibility of the whereabouts of their requirements and the ability to monitor budgets more effectively. The system will be constantly upgraded to ensure it can be used to it full capacity.

The future benefits of the system of this will be:

Establishment of Catalogues of approved products as a mechanism for standardisation and consolidation of ‘non stock items’

Improved reporting for Care Groups and visibility of Budgets with improved ‘drill down’ facilities for all budget holders.

Approval of requisitions and Invoices via a mobile application A further improvement in this area has been the implementation of a e-tendering software package which sends out and receipt pre-qualification questionnaires and tenders electronically, giving better visibility to suppliers and a clear audit trail for the trust. The system also ensures transparency for the trust as all our tender projects will be available on Contracts Finder Contracts finder is part of the GOV.UK website which ensures compliance with Transparency and partnership by advertising all public sector requirements over 10k. This encourages smaller businesses to participate and broadens the market for all products/services.

8 PROCUREMENT RESOURCES In order for the Trust to implement this strategy effectively the staff working with the Purchasing Department must: Ensure all procurement process are undertaken with integrity, honesty, with transparency and behave ethically at all times Obtain skills and competencies which will enable them to perform their roles efficiently and professionally. Are subject to PDRs on an annual basis and undertake mandatory training as and when required.

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9 SUMMARY This updated strategy re-iterates the importance of effective supply management to the overall performance of the Trust and has identified a set of principles to be adopted throughout the Trust and has highlighted the actions to meet the strategy. STRATEGY REVIEW This strategy is to be reviewed by April 2021

10 TRAINING IMPLICATIONS

POLICY TITLE

Staff groups requiring training

How often should this be

undertaken

Length of training

Delivery method

Training delivered by

whom

Where are the records of

attendance held?

Requisitioners and Budget Holders

As and When Required

1 Hour Face to Face

Procurement Staff

N/A

11. MONITORING ARRANGEMENTS

Area for Monitoring

How Who by Reported to Frequency

Achievement of Objectives within this Strategy

Continuous recording of

objectives

Procurement Department

Head of Procurement and Purchase Ledger

6 monthly

12. REFERENCES TO OTHER DOCUMENTS

The Public Procurement Regulations 2012 (OJEU) Requisitioning, Ordering and Receipt of Goods Procedure (RDaSH) Modern Slavery and Human Trafficking Act 2015 NHS Standards in Procurement 2013 Procurement Transparency: England 2013 Public Contract Regulations 2015

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APPENDIX 1 – Key Deliverables

Key Area Objective Strategy Benefits Measure (KPI)

Demand Management

The overall spend on goods and services is influenced

Goods/Services selection must be conducted in a planned, constructive and transparent manner to ensure risks are minimised and whole life costs are analysed

Develop catalogues for high volume/high demand products, where not offered vis NHS Supplychain

Develop and monitor a process of product standardisation/rationalisation where appropriate

Work with existing stakeholder groups, ie OMM Medical Devices Group and Estates

Work with Clinicians to ensure the best outcome for service users ensuring both clinical and commercial considerations are considered and combined

Control of product ranges, contribute to reduction of risk, particularly around medical equipment and consumables.

Enhanced leverage via consolidated usage and through potential collaborative procurement activity

Clinician fully supported in their clinical/client facing activity

Measurement of savings as a result of consolidated usage/collaborative purchasing

Reduction in the range of like for like products by implementation of ‘best value’ masking in the NHS Supplychain range

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Purchasing

Purchasing is about the identification of need to the point of disposal and related supply chain activity that needs to be administered in a cost effective manner that demonstrates value for money

Purchase all goods and services in the most cost effective manner and that they represent best value to our service users and staff giving consideration to all activity that forms part of this process

Continue to review all non-purchase order activity and put systems in place to maximise the amount influenced by procurement and where possible the expenditure is processed via the purchase order route

Increased contract coverage and control of expenditure

Increased control of contracts with contracts renewed in a timely and cost effective manner

Effective management of workload

Compliance with the SFIs and relevant EU legislation

Delivery of annual savings target

Increased contract coverage, demonstrating increased control and influence of expenditure

Reduction in the amount of SQWs


Cost

Various elements contribute to the overall product or service cost and each one needs to be taken account of accordingly

All goods and services must be ordered, received and paid for in the most cost effective way possible. Influenceable contract coverage should be maintained and increased working with clinicians and corporate staff to maximise clinical and commercial benefit

Ensure that value for money can be demonstrated

Take into account of the ‘whole acquisition costs’ in all purchases applying appropriate weight in all evaluations

Contract manage to ensure initial benefits are delivered

Compliance with Trusts SFIs and EU Legislation

Reduction in risk of non-compliance with regulations and governance

Increased contract coverage and compliance

Increased control and influence on spend

Achievement of Trust Non-Pay savings target

Increased contract coverage demonstrating increased control over expenditure

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Governance

The Trust is bound by statutory and mandatory public procurement regulations and the various requirements of probity and corporate governance. Therefore it should be reaffirmed that the Trusts supply activities are in accordance with the Trusts Standing Financial Instructions and Standing Orders.

Work within the Trust Governance arrangements as approved by Board

All purchasing activity is undertaken in line with pre-determined thresholds

Levels of financial authority are monitored and updated in accordance with the scheme of delegation

All SQWs are appropriately challenged and those approved are recorded for reporting to the Audit Committee

Management of risk via pre-determined thresholds

Robust processes in place

Compliance with audit requirements and recommendations

Adherence to all appropriate regulations

Audit Reports

Tenders and SQW reporting

Financial hierarchy in place and regularly reviewed

Tender Documentation


Systems

Robust Systems are critical for effectively managing the procurement function and for the production of timely and robust management information

Ensure optimum use of the Integra Finance System and the Due North E-tendering portal to maximise benefits and highlights the audit trail

Ensure upgrades to the systems are undertaken and are maintained effectively

Improved Governance and Audit Trail

Increased visibility of expenditure

Improved demand management

Use of electronic Tender System opening up markets and improving competition

Value for money obtained and increased contract coverage.

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Staff

The development of staff is integral to the department in delivering a cost effective and professional service to the Trust

Expenditure is under the influence of professionally qualified staff or suitably trained staff. The skill mix and abilities will be identified for providing an effective and efficient procurement service

All staff will be provided with the opportunity to attend appropriate training commensurate with their role and level of responsibility

Improved Skills

A responsive service with a greater understanding of customer requirements

Developed and informed staff

Staff Retention

Professional development

All mandatory training met.


Miscellaneous

These are areas within the Trust business that directly influence the direction taken on both procurement decisions made and the long term goals of the procurement function.

To investigate ways to further promote and enhance the reputation of the procurement function within the Trust

Ensure that all Trust staff are fully trained in the Integra Finance System and there is a requirement to follow correct procurement procedures and why.

Improve awareness of the Trusts SFIs

Trust staff are aware of what procurement procedures they need to follow and the governance surrounding it.

Internal resource helping the procurement team and become involved in tendering activity, leading to efficient and cost effective contracts

Reduction in the number of NON-Po invoices due to Trust staff being more informed on procurement procedures and the methods/rules for purchasing goods and services

Contribution valued as part of a Trust tendering project team.

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Appendix 2 SWOT Analysis

Strengths

Team experience of a vast array of Category areas

Experience of delivery of services in partnership with other organisations

Familiarity with change and agility of team

Team experience of delivery of efficiency savings targets Weaknesses

Team require further support in key procurement skills, only a small percentage of the team professionally qualified

Engagement with staff and stakeholders need to be further strengthened to improve procurement profile within the Trust

Small procurement team Opportunities

To fully utilise improvements in innovation and technology

Newly identified opportunities for efficiencies in the supply chain by increased market testing and benchmarking.

Local Collaborative opportunities Threats

Failure to effectively engage and consult stakeholders, leading in ineffective procurements.

Culture of Trust not adopting Change and innovation

Cost increase of goods and services due to value of the pound

Brexit, changes in legislation