Procurement Annual Review

Transcription

1 Board Paper 2016/14 Shetland NHS Board Meeting: Paper Title: Author: Shetland NHS Board Procurement Annual Review Karl Williamson Job Title: Head of Finance & Procurement Executive Lead: Colin Marsland Date: 04 April 2016 Response required from the meeting: The Board is asked to note: The in year performance against procurement objectives The Board is asked to approve: The basis of the procurement objectives for 2016/17 Summary of paper: This report represents the annual report on procurement performance across the Board as required by the Procurement & Logistics Strategy. Assessment of implications to the organisation in respect of: Patient Safety: Staffing/Workforce: Finance/Resource: Risk: Equality & Diversity: None No specific issues identified. No specific issues identified. No specific issues identified. Certain procurement procedures may make it difficult for small & medium sized enterprises (SMEs) to compete for NHS business. However, sustainable procurement practices are being developed to address these issues. Community Planning / SOA: Legal Issues: Fit with Corporate Objectives/Action Plan: Previously considered by: None None The Corporate Action Plan (CAP) requires the board to manage its resources, achieves financial balance and ensures best value for the use of public funds. Sound procurement practices will result in inputs of the right quantity, quality and price at the right time and place to meet operational needs. Procurement User Group (PUG)

2 SHETLAND NHS BOARD PROCUREMENT ANNUAL REVIEW Purpose of Paper The purpose of this paper is to advise the Board of the procurement performance during 2015/16 and to seek approval for the basis of the 2016/17 procurement objectives. 2. Background The Board has a Procurement & Logistics Strategy in place which underpins all the procurement activity of NHS Shetland. The strategy requires an annual report to be presented to the Board which shows in year performance against procurement objectives and to agree the objectives for the following year. The current Procurement & Logistics Strategy will be revised during 2016/17 to meet the requirements of the Procurement Reform (Scotland) Act which comes into effect on 18 th April The revised strategy must be in place by 31/12/2016 to meet the statutory requirements. 3. Summary of 2015/16 performance Procurement Department 2015/16 has been a challenging year for the Procurement Department as in October the Transport & Purchasing Manager and one of the Procurement Officers resigned from their posts. The Procurement Officer post was successfully recruited to but the Manager post was held vacant until a review of the department was carried out by National Services Scotland (NSS) during November. The review was carried out to assess the potential to outsource the work previously carried out by the Transport & Purchasing Manager to NSS. Due to the fact the Team was operating on reduced capacity for five months of the year their main focus has been to ensure a sufficient supply of goods and services to meet the demands of the Board and to maintain and support the eprocurement system, PECOS. The team has continued to control and replenish stock levels within the central warehouse and also across many of the clinical departments in the hospital. The work in the hospital has optimised stock levels, reduced wastage and freed up more clinical time to focus on patient care. During 2015/16 the Procurement Team has rolled out PECOS to all the Health Centres so they can benefit from an electronic ordering system and obtain national contract prices for many of their day to day requirements.

3 Organisational During February 2015 National Services Scotland (NSS) carried out an Intensive Improvement Activity (IIA) as instructed by the Board s Executive Management Team. The aim of the IIA was to review all trade spend (non-pay spend) and current procurement process and practice and identify and prioritise benefits and savings opportunities. Specifically this IIA aimed to: Identify a minimum 100k of potential savings with a recommended sustainable and repeatable approach to deliver these and to Enable wider penetration and exploitation of professional procurement in areas previously excluded. The recommendations contained in this report formed the 2015/16 procurement objectives which were to be progressed by various staff who had accepted ownership through the Procurement User Group (PUG). Progress against these objectives is detailed in Section 4 below. Following the departure of the Transport & Purchasing Manager in October the Board asked NSS to carry out a review of the department to assess whether a direct replacement or an outsource arrangement would be the most appropriate course of action. A decision was made to enter a SLA with NSS to provide strategic procurement leadership and systems management for an initial one year trial period. This arrangement will provide the Board with a resilient, value for money service which will drive procurement improvement during 2016/17. This Hosted Service arrangement will begin on 1 st April 2016 and will be monitored using a comprehensive suite of KPIs which will be discussed at quarterly contract management meetings with NSS. On 2 nd February 2016 the Board was assessed under the new national Procurement Improvement Programme (PCIP) which has now replaced the former Procurement Capability Assessment (PCA). This assessment will provide a valuable baseline on which improvement can be monitored against during 2016/17. The PCIP score will be one of the KPIs which will be monitored during the Hosted Service arrangement with NSS. The Procurement Reform (Scotland) Act comes into effect on 18 th April so various preparatory work has been undertaken during 2015/16 to ensure the Board is in a position to meet the requirements of the Act. The Board s key procurement staff have all attended Scottish Government training courses and NSS, through the SLA, will provide professional support and guidance to ensure compliance. Statistics The value of orders going through PECOS in 2015/16 was 3.349m and the volume of orders was 8,358. This represents a 1% and a 1.5% improvement from 2014/15 figures of 3.319m and 8,231 respectively.

4 It is important we look to improve again on this during 2016/17 as all expenditure routed through PECOS can be quickly analysed using the BOXi Spend Analyser Tool and appropriate improvement activity can be identified. Expenditure outwith PECOS is difficult to monitor and creates risks around financial forecasting and delays in payment. The NSS Hosted service will lead to improvements in this area as they will optimise the catalogues available through PECOS and look to move all spend to PECOS by March Catalogue expenditure (national contract items) accounted for 23% by value and 69% by volume in 2014/15 22% and 70% in 2014/15. The high value being purchased off contract is largely composed of estates work and expensive medical equipment which has no national contracts in place. Local tender exercises are carried out to ensure best value is achieved in these circumstances. The detail behind these figures can be found in Appendix Progress against 2015/16 objectives During February 2015 National Procurement carried out an Intensive Improvement Activity (IIA) as instructed by our Executive Management Team. The aim of the IIA was to review all trade spend (non-pay spend) and current procurement process and practice and identify and prioritise benefits and savings opportunities. Specifically this IIA aimed to: Identify a minimum 100k of potential savings with a recommended sustainable and repeatable approach to deliver these and to Enable wider penetration and exploitation of professional procurement in areas previously excluded. The IIA report, which arrived in March 2015, formed the basis of our 2015/16 procurement objectives and identified a range of savings across Administration, Medical/Surgical, ehealth, Facilities & Estates and Hotel Services. Progress against these objectives has been limited due to lack of staff resource to focus on these projects. The NSS Hosted Procurement Service which begins on 1 st April 2016 will look to assist the Board in moving these forward. Appendix 2 details the objectives and progress against each project /17 Objectives The 2016/17 procurement objectives are included in Appendix 3. NSS has agreed procurement objectives with the Board and will support local staff in achieving these during 2016/17. The main communication channel for these projects will be through the Procurement User Group which meets every second month. A representative from NSS will attend every meeting and will discuss progress against each of the in year objectives.

5 There will be monthly KPI review meetings held between NSS and the NHS Shetland Director of Finance / Head of Finance & Procurement to ensure performance levels are in line with the SLA agreement. The procurement annual performance report will again be presented to the Board in April 2017 which will include a greater level of management information as a result of improved reporting and monitoring gained through the Hosted Procurement Service. The Board is asked to: Note the 15/16 performance Approve the 16/17 objectives Karl Williamson Head of Finance & Procurement 04 April 2016

6 Appendix 1 - Spend Analyser, Financial Year Overview 2015/16 Prior Year /15

7 Appendix 2 Progress against 2014/15 Procurement Objectives Category Area Recommendation Progress at 31st March 2016 Air Transport Opportunity exists to re-negotiate There is no further scope to negotiate terms with Loganair via newly terms but savings can be achieved by appointed travel provider - reducing the number of flights. This Chambers. Review internal project is now part of the Board's controls managing patient travel overall project to reduce patient travel requirements incorporating NHS costs. Grampian. Ferry Transport Opportunity exists to formalise a SLA directly with Serco or route this service through the newly appointed travel provider - Chambers. Serco did not wish to enter negotiations so again this work falls under the Board's overall project to reduce patient travel costs. Admin Contract Paper Taxis Stock Savings Dental Labs Move to non-bleached paper. Small cost saving but message about making changes will be strong and add weight to report overall. Review of NHS Shetland's Transportation requirements to be carried out and consolidated if required. Opportunity to move to consignment stock for some items. Data analysis of usage patterns required to identify appropriate items that could be included. Quality of service is essential to reduce the number of returns and the time to provide the service to the patients. Implemented - Annual savings of 2k be assisting the Board in renewing the taxi contract during 2016/17. NSS are developing a project proposal to the Board based on a cost/benefits appraisal. Other supply chain efficiencies are also being scoped. NSS are developing a project proposal to extend the use of PECOS within the Board, which will include Dental Labs. Equipment Purchasing Current supplier for bed purchases is not on contract register - formalise contract to improve savings opportunity. be assisting the Board during 2016/17. Medical / Surgical Facilities & Estates Hotel Services Decontamination Formal Tendering Food Supplies Janitorial Supplies Currently the contract is on a year to year basis. Formally tender to increase the length of the contract and achieve savings. Potential to increase the length of agreements / contracts with suppliers. Reduce or eliminate the one year rolling contracts to increase commitment to suppliers who win tenders and secure better pricing agreements. Increase use of national contract suppliers where appropriate. Formalise contracts with local suppliers through tendering to secure best value. Increase engagement with local suppliers to maximise commercial opportunities. be assisting the Board during 2016/17. be assisting the Board during 2016/17. be assisting the Board during 2016/17.

8 Savings and Benefits People Reform Act Appendix /17 Procurement Objectives Objective Description Procurement strategy ready for Board sign off (in alignment with SG best practice template, fully reviewed by NHSS PSG Target Delivery 31 st August st draft full spend analysis highlighting top 5 focus areas 26 th May PUG Meeting 1 st issue of NHS Shetland public Contract Register 1 st April 2016 Issue 1 Contract workplan 26 th May PUG Meeting Issue 1 Benefits Tracker 26 th May PUG Meeting Identify Suppliers for supplier management 26 th May PUG Meeting Commencement of supplier management activity 1 st July 2016 Implementation of procurement customer satisfaction regime 1 st June 2016 In-Year savings target (regular progress review) 140K (as defined in 16/17 LDP) PCIP internal scoring review Every 2 nd PUG from May meeting onwards Achieve KPI Targets below 31 st March 2016 Draft KPIs for management of Hosted Procurement Service TARGE T SCORECARD MEASURE WEIGH T OWNER Baseline Target Contract Register validation 8 team tba 100% National Contract implementation to Plan 7 team tba 100% PCIP score 8 team 35% 75% Sub Total 23 Delivery of Training plan 8 JMcL PUG meeting attendance 7 team Sub Total 15 National Contract Gap 8 National Contract Savings delivered 8 team tba team tba 27,750

9 Systems Local Contract Savings delivered 8 team tba 30,000 Other IIA savings delivery 7 AK 0 42,000 Sub Total 31 eprocurement Spend (12mths k) 7 JMcL ,210 PECOS Spend (12mths k) 8 JMcL ,220 Catalogue usage (monthly transactions %) 8 JMcL 42% 90% First Time Match Rate (monthly within 5 days) 8 JMcL 64% 80% Sub Total