For most industries across the economy, the pandemic highlighted the importance of having effective supply chain management strategies in place to overcome near and long-term challenges and minimise potential bottlenecks.
Supply chain management with the support of digital technology was nowhere more needed than in the healthcare sector. A series of unpredicted events and a surge in demand for various medical equipment and services meant that hospitals, clinics and vaccination centres were left without the appropriate supplies, increasing patient wait times and further creating more bottlenecks in the system.
At the time, traditional supply chain strategies seemed inadequate in handling the demand from Trusts across the United Kingdom. However, long before the pandemic broke ground, the National Health Services (NHS) has been in the process of introducing a new medical technology strategy which is set to overhaul traditional inefficiencies of supply chain management and replace it with a fully digital system.
Importance of digital transformation in the NHS Supply Chain
Digitisation of NHS procurement and NHS Supply Chain has been an ongoing effort. For one, the NHS Supply Chain completed around £1.5 billion of orders in 2022-23 through its digital procurement route known as eDirect.
Secondly, the NHS Supply Chain oversees a catalogue of more than 600,000 medical and non-medical products, with an operating budget of £240 million for 2023–24.
Thirdly, the key objectives for the NHS Supply Chain are to deliver £2.4 billion of savings and achieve 80% relevant NHS spending on medical equipment and consumables in the current financial year.
Modernisation efforts for the NHS Supply Chain have been underway for a couple of years already, and are expected to run until 2030. The digitisation programme helps to recognise inefficiencies in the current supply chain system and seeks to reorganise the NHS Supply Chain operating model.
By making improvements to the current operating model, and replacing or upgrading key legacy IT (information technology) systems, the NHS Supply Chain can improve supplier relationships, transform equipment and service delivery, and create more value for patient care.
With efforts underway, the NHS Supply Chain estimates that its transformation programme will cost nearly £144 million. With such a big price tag, it’s important to consider how much value the NHS Supply Chain creates for NHS Trusts and affiliated stakeholders. By embracing digital transformation, the NHS long term plan can create a more efficient and transparent procurement system that harnesses medical technology to help create more supply chain visibility.
How digital transformation improves service delivery
There are plenty of reasons why digital transformation and innovation play an important role in the NHS Supply Chain and for various healthcare organisations with specialist buying functions. During the last several years, improvements and the implementation of the medical technology strategy have helped to highlight key areas of importance for the NHS and suppliers.
Online ordering
As mentioned, the NHS Supply Chain oversees a catalogue of more than 600,000 products. This includes medical and non-medical equipment, consumables and various other services. On average, NHS England and NHS Supply Chain work with thousands of various suppliers from different parts of the economy and sourcing materials from various corners of the economy.
With an innovative internet-based system NHS Trusts can now order supplies and materials directly through a supported platform that allows them to have more oversight and provides them with more efficient outcomes. An online ordering system allows for various product and service integration and allows all data to be tracked and managed by a central authority.
Delivery Tracking
Anyone who has ordered something online understands the need to track their delivery. From the warehouse to the front door, consumers want to know how long their packages will take, and when they can expect to have them delivered. A similar need is required in the healthcare sector, which would allow NHS Trusts and other healthcare organisations to have better transparency regarding the delivery of products and consumables.
Monitor spending
A key objective of supply chain digitisation is to ensure the reduction of cost and achieve more relevant spending and deliver savings. Technology can help keep better track of spending, which could allow Trusts to make more relevant financial purchasing decisions. By having financial information available in a single place, suppliers, Trusts and departmental stakeholders can make more accurate spending analyses and adjust budgets more appropriately.
More than this, NHS Trusts can freely purchase and procure healthcare products and services from private suppliers outside of the NHS Supply Chain. According to the National Audit Office (NAO), the NHS Supply Chain estimates that Trust’s annual procurement spend through the Supply Chain was £4.5 billion as of September 2023. In addition, a robust £3.4 billion was spent outside of the Supply Chain’s function.
Digital tools can help keep records of spending history with a health service journal, in turn potentially minimising overspending, and require NHS Trusts to submit more frequent records for auditing. This would help reduce any potential fraud or corruption and help provide a more value-driven and economic outcome for patients.
Reducing lead times
Supply chain bottlenecks are bound to occur at some point. The pandemic highlighted how many NHS Trusts were unprepared to handle a sudden increase in patient demand.
Not only this but the NHS Supply Chain and suppliers that did not yet have the appropriate systems in place were caught in the middle of a storm, which in turn created further bottlenecks down the chain and resulted in longer lead times for patients.
With digital supply chain management systems, all stakeholders can have better visibility over the supply chain. This could mean that NHS Trusts can place orders more effectively in advance, removing lag times for specialised materials and services. The NHS Supply Chain can communicate with suppliers about increased demand for quality products, allowing them to increase stock count and availability of specific products.
Digital tracking systems can help Trusts keep a better stock of all materials available, and automate ordering should frequently used materials fall below a specific level. NHS Supply Chain can analyse stock data more effectively, which means all stakeholders can be informed should supplies begin to fall below a certain level or are not currently available.
All of these efforts make it easier for Trusts to commit to a high-quality service delivery, which in turn can help reduce potential bottlenecks, and further reduce patient waiting times.
Supporting patient outcomes
Part of modernising the NHS Supply Chain is to seek ways in which to improve patient outcomes. Service delivery has been on the decline in recent years, as growing patient demand and shortage of skilled healthcare professionals have placed immense stress on the healthcare system and forced the adoption of procurement reform.
These challenges, coupled with supply chain bottlenecks have meant that quality care is not accessible across all NHS Trusts creating further healthcare inequalities and forcing more patients to seek alternatives, which in turn can drive up personal and individual medical costs.
As a whole, digital transformation of the supply chain should not only be focused on removing inefficiencies but also seek to deliver more effective services to patients across the UK. By working with the appropriate suppliers, and replacing legacy systems that are no longer supporting current demands, the NHS can become more well-integrated and connected with providing quality care at all touch points.
The role suppliers have in digital transformation.
Digitising the supply chain is not a one-sided approach and requires all stakeholders to provide valuable insights and support. In this case, suppliers that are working with the NHS, NHS Supply Chain or NHS Trusts have an important role to play in the betterment of current supply chain IT systems and medical technology strategies.
Quality: Better technology could mean that the quality of critical products, services and other works could improve across the value chain.
Visibility: By incorporating technology into delivery systems, stakeholders can have better oversight and visibility of their shipments.
Communication: Functional communication is a key objective, and for suppliers, this could be the difference between meeting contract requirements or falling behind on shipments.
Relationships: Building lasting relationships with the NHS, NHS Supply Chain or any NHS Trusts can provide better long-term, business opportunities and growth, helping create more collaborative ecosystems.
Competition: Those that seek to adapt and change will likely become more competitive in the short term, which in turn could change market dynamics among suppliers that have been slow to digital transformation.
Closing Thoughts
Looking forward, the NHS Supply Chain will continue to embrace change, modernisation and most importantly, digitisation. With this approach, the NHS Supply Chain can replace legacy IT systems, and instead incorporate a more modern, efficient and advanced medical technology strategy.
Though there is still a lot of work that needs to be done, suppliers play an important role in this digital transformation. Without having the right people and systems onboard, supply chains will continue to experience bottlenecks, creating longer wait times for NHS Trusts and decreasing the quality of patient care.
Digital transformation is imminent. Having the right systems in place could mean an improved NHS Supply Chain which can affect all other patient outcomes in the long term. By investing in the appropriate technology, the NHS can move ahead of the times, while continuously delivering high-quality healthcare.
