In my most recent blog, I promoted the best practice of ‘Total Spend Management’ and the excellent initiatives being delivered at University Hospitals North Midlands. It was recognised that the transformation of Procurement and Supply Chain Management must be measurable across a range of dynamics, not just cost reduction.
In today’s blog, I will touch on the work of another leading teaching hospital and how they have embedded a range of ‘measures that matter’, not only within the Procurement function, but across the Trust.
With Lord Carter’s review acting as catalyst, the importance of metrics and measures has gained traction within NHS Procurement, in order to expose relative performance across Trusts through national league tables.
Indeed, the value of continuous investment in the Procurement function is becoming increasingly apparent, alongside the implementation of consistent metrics and ‘measures that matter’ across hospitals. Such consistency is critical to help deliver NHS-wide productivity and efficiency.
And it was what we observed, first hand, in a number of US hospital chains in the autumn of 2014 that provided the groundwork for these new metrics. There, Chief Procurement Officers and Supply Chain Directors were accountable for delivering against a dedicated ‘strategic metric’. The metric was a driver of many key outcomes including, we noted, significant continuous investment in the Procurement and Supply Chain Management function. The metric was consistent across many US hospitals, and Executive Boards had adopted it to promote overall productivity and efficiency.
Start with your Strategy
“If you rigorously focus on your people, processes and partnerships, your performance should look after itself.”
When Ben Shaw joined University Hospitals of Leicester (UHL) in 2015 as Head of Procurement from a FTSE 100 company, he immediately initiated a strategic performance review of the Trust’s Procurement and Supply Management function to help drive operational productivity and define the ‘measures that matter’. In 2015, as one of the largest teaching hospitals in the NHS employing over 12,000 staff, UHL managed an annual spend of £440m across 5,000 suppliers.
Ben outlined his vision for the function as part of a published Procurement Strategy – formally signed-off by the Trust Board – detailing the key developments and improvements that would be delivered over the following three years.
The strategy incorporated a range of key priorities and initiatives that included:
- ‘Fixing the basics’;
- Developing a high impact team;
- Instilling effective stakeholder (colleague) engagement;
- Embedding category management;
- Managing key suppliers and contracts;
- Optimising stock and inventory;
- Improving related business processes;
- Executing operational efficiency (e.g.: for effective catalogue management); and
- Identifying and promoting key metrics supported by analyses.
These were aligned with the strategic themes of People, Process, Partnerships, and Performance, with a clear plan for how these improvements would be measured.
Measures that matter
The objective of the Strategy and key measures was to drive productivity and efficiency, and to influence key behaviours and outcomes across not only the Procurement function, but also across the wider Trust.
And since 2015, the team (now led by David Streets following Ben’s appointment as UHL’s Director of Efficiency) has perpetually maintained a strategic focus in terms of establishing best practice performance measurements.
The approach is certainly worth noting, and indeed replicating. It includes establishing:
- A Balanced Scorecard: a strategic dashboard has been developed and embedded across the function and the Trust. Unsurprisingly, it covers the four key themes captured in the Strategy: People, Process, Partnerships and Performance. There are numerous measures and metrics aligned to Carter, NHSI, cost reduction, key operational activities (particularly those related to overall organisational delivery), training and development, and even raising wider commercial awareness across the Trust.
- A Route Map: this acts as a strategic ‘framework for action’, and identifies and tracks the progress of key activities that, once delivered, will ensure that the prime objectives of the strategy will be achieved. These key activities have been fed into individuals’ objectives and form the basis of their appraisal process.
- NHS Procurement and Commercial Standards: progress is regularly monitored against each of the 6 strategic domains and corresponding 29 standards. Notably, UHL was in the vanguard of Trusts to achieve Level 2 in 2017.
- Comms Cells: a technique deployed in the automotive sector (Toyota, Unipart) has been established in UHL to achieve an internal culture of continuous improvement and empowerment. They allow autonomous teams to review performance (daily, weekly or monthly) against a set of agreed metrics and help them to come together to identify ways to continuously improve.
And while there are many key metrics and measures being tracked, there are two specific ones which attracted my attention, and, interestingly, remain aligned to the priorities within the Strategy of 2015:
- Stakeholder (colleague) engagement: I think this is one of the fundamental building blocks of a robust category management organisation and process. If you are regularly meeting your key stakeholders, either through one-to-ones, divisional meetings, or Trust-wide ‘clinical procurement group’, you are setting up your team for success in shaping or influencing key outcomes for the Procurement function. The team tracks engagement with its key stakeholders and, interestingly, this is consistent with the approach taken by high-performing customer success teams.
- Catalogue Management: I have noted in numerous Trusts that it can often take weeks (sometimes months, I hear…) to upload product and price data in the form of an accurate catalogue that feeds key systems (e.g.: ERP, inventory management). The impact on the Procurement team, Finance team, and related operational delivery teams across the Trust, can be significant when the core procurement catalogue is constantly out-of-date. The team tracks the ‘time taken to upload a catalogue’ and, since the measure was implemented, it has been reduced by 50%.
“There’s only one measure that matters to me, and that’s cost savings.”
For many years, as senior practitioners, we have had to be almost scientific in the way we measure the performance of the Procurement function, but how often have you heard the words above!
The value of the Procurement function extends far beyond a ‘focus on price’ but, as exemplified by the approach of UHL, it is delivered by a comprehensive strategy aligned to relevant metrics and measures.
|Every month, we will promote the excellent work being delivered by an NHS Procurement team. If you would like to feature the work of your team in a future blog, please write to Rob at: email@example.com|