A critical part of the planning of your procurement overhaul is deciding the people who will be involved from within the business. This is something I spend my time advising companies on. Last year we worked closely with the Mid Essex Hospital Services NHS Trust to help them reduce costs in the area of Reconstructive and Trauma Orthopaedics.
We needed to make significant savings while upholding the high clinical reputation of the Trust, so we formed a cross-functional commercial and clinical team. This included a consultant, lead nurse, theatre ordering technician and us – the procurement team, a mixture of in-house and consultancy. The team would meet weekly and report directly to the Clinical Director, Chief Financial Officer and Chief Operating Officer.
What worked particularly well was that a joint team was able to exploit its collective clinical and commercial knowledge to unlock significant savings for the Trust. The number of suppliers and items has been reduced and the surgical team now has a clear picture of the costs of the products they routinely use and, through the engagement with surgeons, why certain procurement decisions have been made. This makes implementation of the changes that are required manageable while improving clinical outcomes.
One aspect that is worth highlighting from this approach is that the negotiation was also a team approach. Fundamental to the achievement of savings was the united front presented to the supply market. Negotiations were conducted jointly by clinicians and procurement with senior executives involved in the final stages. This combined commitment achieved results.
This model can be transferred to others businesses. When analysing what we did you’ll notice three important in-house groups:
1. Procurement team
2. Frontline of the business (in this case clinicians)
3. Senior management
By working in this way, change has a greater chance of success and is sustainable in the long term because each group has a role at the critical levels of the business: across from the top, the back office as well as customer facing.
Next, in the final blog of this series, I will cover in-depth and with examples the potential benefits of taking on the challenge of changing your procurement processes.
About Richard McIntosh
Richard is Managing Director of INVERTO UK, an international management consultancy specialising in procurement. He has led and delivered many procurement consulting assignments, particularly strategic sourcing, organisation and process re-design and people and skills development. He has worked across many sectors, private, public and not-for-profit, leading procurement projects for clients such as Nokia, Visa, Aberdeen Asset Management, eircom, the Ministry of Defence and the NHS.