Lessons for the NHS from the literature on procurement and supply chain management

Transcription

1 Lessons for the NHS from the literature on procurement and supply chain management Joe Sanderson 1, Chris Lonsdale 1, Russell Mannion 2 and Tatum Matharu 1 1 Birmingham Business School 2 Health Services Management Centre This project was funded by the National Institute for Health Research HS&DR (project number 12/5004/03). The views and opinions expressed therein are those of the authors and do not necessarily reflect those of the HS&DR, NIHR, NHS or the Department of Health. European Health Management Association Conference, June 2014

2 Research questions RQ1: What are the principal theories and conceptual frameworks addressing procurement and supply chain management (SCM)? RQ2: How can theories about procurement and SCM in general help NHS managers and clinicians in their commissioning and procurement activities? RQ3: What is the empirical evidence about the impact of different procurement and SCM techniques on outcomes at different stages of the process and in different contexts? RQ4: What are the different approaches to improving procurement and SCM practice and which are likely to work best in the different contexts and types of NHS organisations?

3 A note on definitions Commissioning is used to refer to the planning, design and acquisition, and monitoring and evaluation of healthcare services (DoH, 2007). As of April 2013 this is the remit CCGs for local services and of NHS England and its area teams for specialist and GP services. One NHS usage of the term procurement refers to the acquisition aspect of this commissioning cycle, whereby NHS commissioners identify, select and contract with providers and monitor their performance in delivering these healthcare services (DoH, 2010). Procurement is also used in the NHS to refer to the acquisition of other the goods and services (e.g. dressings, medical equipment, IT equipment, temporary staff) needed to support healthcare delivery (DoH, 2013).

4 RQ1: categorising the P&SCM literature

5 RQ2: some key learning opportunities Evidence of the use of P&SCM theory in understanding NHS commissioning and procurement activity: TCE and agency theory (most frequently); aspects of the networks and inter-organisational relationships literature dealing with trust and collaboration, in particular relational contract theory; and some aspects of the ISCM literature, though typically in an intraorganisational context. Remaining learning opportunities: about the nature of decision-making by NHS commissioners (now GPs), the potential for conflict, and the optimal size of decision-making units in clinical commissioning groups (CCGs) about how inter-organisational buyer supplier relationships develop over time in a wider network context, and about how power and trust impact on collaborative efforts to deliver supply improvement and innovation in the NHS; and about the scope to apply various operational supply chain management tools and techniques (lean, agile, Six Sigma) to supply chains delivering physical goods to the NHS.

6 RQ3: emerging findings Testing of the efficacy of practices and techniques in one stage of the procurement process has largely been undertaken in isolation from testing in others. There are exceptions to this and the self-enforcing agreement concept has unifying potential. Certain key issues for managers, for example, purchasing category management and the structure of the procurement function, have not been well researched by academics. There are largely positive findings for a range of practices and techniques including collaborative buying, e-procurement, competitive tendering, the development of trust with suppliers, practices suggested by TCE and collaborative supplier relationship management. But the empirical literature supports the widely held view that managers need to adopt practices and techniques in line with the transactional circumstances. Key variables creating different transactional circumstances include buyersupplier power, potential for opportunism, purchase importance or complexity and supply market difficulty or uncertainty.

7 RQ4: improvement through portfolios Portfolio models provide a structured approach to transactional circumstances and appropriate practices and techniques. There are different types of portfolio approaches that could be of use: purchase category focused; relationship focused; supply chain focused. An example: based on Kraljic s Purchasing Portfolio Matrix (1983) High Purchase importance Low Leverage Use volume with preferred suppliers Non-critical Consolidate & standardise spend Low Strategic Close collaboration with key supplier Bottleneck Capacity insurance and seek out alternatives Supply market difficulty High