THE CARTER REPORT – The five key challenges

THE CARTER REPORT – The five key challenges

THE CARTER REPORT – The five key challenges

How trusts can meet the challenges of transformation in procurement, purchase-to-pay and supply chain management

The recommendations detailed in the Carter Report cover a wide range of productivity and efficiency targets, which trusts must meet in order to deliver savings of £5 billion. Within these, recommendation 5 addresses procurement – and the implications are far-reaching.

To achieve the targets set by Carter, most trusts will need to transform their entire procurement function – from implementing best practice purchasing and stock management procedures, to improving supply chain performance and modernising the complete purchase-to-pay process. Given the tight timescales detailed in the Report, some trusts have already taken steps to address this transformation. But with support from NHS Improvement still in the development phase, others will be under significant pressure to deliver on their targets, especially those without the resource or expertise to action the recommendations.

In addition, Carter highlights that the DH’s NHS Procurement Transformation Programme (an NHS Catalogue, a Future Operating Model re-structuring the NHS Supply Chain service and eProcurement standards) will take time – so trusts need to act now.

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To deliver on Carter’s targets, trusts must overcome five key challenges:

1) Non-pay spend:
A 10% saving in non-pay spend, delivered through a comprehensive programme of procurement cost reduction, including standardisation, aggregation, category management, sourcing and professional supplier and contract management
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CHALLENGE:
A 10% saving in non-pay spend, delivered through a comprehensive programme of procurement cost reduction, including standardisation, aggregation, category management, sourcing and professional supplier and contract management 

IMPACTS:
- Overall reduction in non-pay spend of 10% by April 2018
- Reduce Estates & Facilities non-pay costs, including FM, catering, cleaning, laundry, building & engineering services, to support estates strategic plan

BENEFITS:
Significant improvement to the trust’s financial position

SOLUTIONS:
- Procura can identify and quantify all possible savings from non-pay spend.
- We can add capability and capacity to rapidly deliver long-term savings

2) Procurement:
Transforming the procurement function from a back-office, transactional department to a fit-for-purpose strategic function able to drive ongoing value for the trust and work collaboratively across the NHS
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CHALLENGE:
Transforming the procurement function from a back-office, transactional department to a fit-for-purpose strategic function able to drive ongoing value for the trust and work collaboratively across the NHS

IMPACTS:
- Trust Procurement Transformation Plan in place by June 2016
- Board Director responsible for PTP
- 90% of addressable spend-by-value under contract by September 2017
- Purchasing Price Index monitored and actioned
- NHS Standards of Procurement adopted – plan in place to meet target by March 2017
- Measurement of KPI’s and provision of spend analysis data to NHS Improvement
- Collaboration with at least five other trusts with aggregated workplans commencing April 2016
- ‘Sunshine Act’ log of payments, gifts and hospitality from suppliers
- Adopt eProcurement strategy including GS1 and PEPPOL

BENEFITS:
Professional management of all non-pay spend on an ongoing basis

SOLUTIONS:
- Procura can provide a Current State Analysis of the procurement function
- We can facilitate, develop and produce the PTP
- We can support implementation of all individual workstreams within the PTP

3) Purchase-to-pay processing:
Enhance current P2P procedures to provide modern, efficient, automated, electronic processing - from requisition to payment
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CHALLENGE:
Enhance current P2P procedures to provide modern, efficient, automated, electronic processing - from requisition to payment

IMPACTS:
- eCatalogue – 90% of transactions by volume through an eCatalogue with a purchase order by September 2017
- Purchase Order compliance – 80% of spend by volume with a purchase order by September 2017
- Consideration of sharing or outsourcing purchase-to-pay processing
- Percentage of invoices processed electronically

BENEFITS:
- Reduced resource costs or re-allocation of resources to value-add roles
- Take advantage of early payment discounts offered by suppliers
- Reduce administrative burden resulting in less errors, invoice mismatches and payment queries
- Improved coding and support for patient level costing

SOLUTIONS:
- Procura can assess and benchmark all current P2P processes, identify solutions and provide a P2P Transformation Plan
- We can support implementation of all solutions

4) Stock and supply chain:
Build efficient supply chain capabilities by developing people and processes that can reduce and manage stock effectively
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CHALLENGE:
Build efficient supply chain capabilities by developing people and processes that can reduce and manage stock effectively

IMPACTS:
Inventory turnover (KPI to be established)

BENEFITS:
- One-off financial impact from stock reduction
- Reduced lost, out of date and wasted stock
- Manage supplier product recalls
- Accurate stock audit

SOLUTIONS:
- Procura can review the entire inbound supply chain to identify improvement areas, quantify financial impact and plan implementation
- We can implement the plan to deliver benefits

5) Outsourcing and collaboration:
Capitalise on economies of scale in the provision of non-core services in order to reduce backoffice costs
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CHALLENGE:
- Rationalise back-office costs to under 7% of income by April 2018, and 6% by 2020.
- Plan to NHS Improvement by April 2016
- Review shared service, outsourcing and collaboration models for non-core services

IMPACTS:
Corporate and administration (back-office) costs

BENEFITS:
Significant improvement to the trust’s financial position

SOLUTIONS:
- Procura can identify and quantify the cost/benefit of outsourcing/shared service collaboration models for non-core services
- We can support implementation