NHS Supply Chain Medical Supplier Board Pre-read 2

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NHS Supply Chain Medical Supplier Board Pre-read 2 NHS Supply Chain Supplier Satisfaction Research Executive Summary and Action Progress Update 19 September 2013 Lead presenter: Joanna Timmerman NHS Supply Chain support: Carol Smith, Marketing Manager, NHS Supply Chain The Supplier Research was presented to the June Supplier Board meeting. Subsequently, its findings have underpinned NHS Supply Chain s Supplier focused strategies. Please read this document and consider NHS Supply Chain s proposed actions. Please come to the Supplier Board meeting with your advice on the proposed actions and your suggestions about how NHS Supply Chain should be addressing the key areas for development. It is proposed that Joanna Timmerman will focus on this action plan as her NHS Supply Chain update agenda item. If you would like Joanna to focus on any particular areas, please inform Louise Hillcoat (louise.hillcoat@supplychain.nhs.uk) by Tuesday 17 September, and we will ensure that the presentation covers those areas in more depth. Executive Summary of the Supplier Satisfaction Research Background The Supplier Board expressed a desire to conduct supplier research. Keen to gain further strategic insight, NHS Supply Chain commissioned an independent market research company to conduct a comprehensive research survey which took place Sept 2012 and Feb/Mar 210. The research involved an initial qualitative stage to explore some of the issues followed by measurement through a broader electronic survey emailed to all suppliers Participation was encouraged by NHS Supply Chain, Chairs of both Supplier and Customer Boards, the DH and the relevant trade associations.. 1. Research Objectives What is important to suppliers in selection of route to market?

Does NHS Supply Chain meet supply needs and how does it compare to other routes? How could it improve to meet supplier needs? How is NHS Supply Chain is working with its suppliers to meet the needs of the NHS? To establish benchmark measures i.e. satisfaction, suitability, recommendation and likelihood to renew the framework agreement To input into the validity of the value propositions to suppliers 2. Response rate achieved A total of 345 responses were achieved, split as follows: 30% of all supplier organisations responded to the survey. The respondent organisations were very representative of the NHS Supply Chain supplier database in terms of: a. sector medical, non-medical, high clinical, capital size of company % of NHS Supply Chain turnover. Summary of findings What is important to suppliers in selection of route to market? Customer preference and access to customer / sales growth potential stated as top influence respectively. Why do suppliers use the NHS Supply Chain Route to the NHS? Access to markets and customers (68%) and customer preference (61%) stated as top reasons for using NHS Supply Chain How does NHS Supply Chain meet suppliers needs and how does this compare with other routes available?

The Direct to Customer route is most likely to meet suppliers needs - The supplier relationship with the customer is a strong driver of the direct route, though the top reason is the preference for the route by the buyer Access to markets and customer preference are the top 2 reasons for using all routes Route How much does this route meet your supply needs on a scale of 1 to 10 Mean score Direct to trust 7.7 NHS Supply Chain 6.5 Other 3 rd party distributors 6.5 Collaborative procurement organisations 5.3 When asked to rate NHS Supply Chain compared to other routes, NHS Supply Chain is comparatively better overall than most other routes, though almost a third feel the direct route is better. How satisfied are suppliers with NHS Supply Chain supply routes? Route Mean score Direct 7.2 Stocked 7.9 Edirect 6.5 Blue diamond 5.8 How suitable a route to market is NHS Supply Chain for suppliers products? Overall suitability score of 6.7 (scores ranged from 7.7 5.4 across different sectors and sales groups) NHS Supply Chain felt to be most suitable by its largest supplier accounts( ie those with highest levels of sales revenue) and non medical suppliers How satisfied with NHS Supply Chain and likely to recommend are suppliers? Overall satisfaction score of 6.0 (scores ranged from 7.2 5.0) Overall likelihood to recommend score of 6.3 (scores ranges from 7.6 5.2) Satisfaction and loyalty highest in NHS Supply Chain s largest supplier accounts and non clinical groups

How likely are suppliers to continue to work with NHS Supply Chain once current framework contracts expire? Overall likelihood to renew score of 80% 91% likely to renew the framework agreement. 80% VERY likely to renew Highest in key accounts and medical product groupings (100%, 95%) Lowest in zero sales group (83%) and high clinical product group (71%) Drivers of satisfaction Suppliers were asked questions relating to their satisfaction with: o The tender process o Working with NHS Supply Chain o Supplier relationship management o How NHS Supply Chain deals with its customers and presents suppliers products Their answers were cross analysed with answers previously given to what was important to them in choosing partner and route to the NHS. The biggest drivers of satisfaction emerged as: Supplier Relationship Management Presenting Of Products NHS Supply Chain performs well in the following areas important to suppliers: o Has a strong brand and position in the NHS market o Availability and helpfulness of NHS Supply Chain support staff o Availability and helpfulness of your buyer o Ease of ordering for NHS Customers o Efficient communications about customer orders o NHS Supply Chain staff are responsive to customers needs The following are important to suppliers and are where NHS Supply Chain could improve (in order of importance to suppliers): o Treats me as a valued supplier o Regular communication about my business o Support for customers to convert to NHS Supply Chain route o Opportunities to promote the value of the products

o Keeps me informed and up to date on changes o Offers range of services which add value / cut cost o Opportunity for a regular business review with buyer o Precise presentation of products in catalogue /online o Provision of data

Summary points NHS Supply Chain is a well-known, highly recognised brand. It is associated with its unique position as a route to NHS markets, professionalism and being easy to work with; however, it is also seen as large, complex, bureaucratic and inflexible Introducing new products and improving supply chain efficiency are strong priorities for NHS Supply Chain Suppliers over the next 2 years and many are already working on this Looking ahead, suppliers tend to want NHS Supply Chain to continue doing what it does but to do it better more efficiently, more effectively, with better communication to build better relationships with its suppliers NHS Supply Chain s proposed responsive actions As a result of the Supplier Satisfaction research, NHS Supply Chain has embarked on a responsive strategy to address the issues highlighted as being areas of importance for suppliers. The action plan will support five strategic pillars: Whilst some of the learning is now forming strategies for change, many issues are already being addressed but not communicated effectively. Therefore a pro-active communications

strategy will underpin all programmes to ensure suppliers are aware of activities, changes and improvements throughout 2013/14.

Pillar 1 - Supplier Relationship Management NHS Supply Chain, as part of its drive towards World Class Procurement, is committed to improving supplier relations and to addressing those issues raised within the research as being satisfaction drivers for suppliers. NHS Supply Chain is investing in a structured partnership approach to working with suppliers to deliver mutually beneficial performance, which delivering efficiencies to the NHS. Satisfaction Driver Keeps me informed and up to date on general changes and Regular communications about my business with NHS Supply Chain Supplier research pointed to some deficiencies in NHS Supply Chain to keep suppliers informed of changes, news and performance issues NHS Supply Chain response The following projects have been included in NHS Supply Chain s supplier communications strategy in order to address gaps in messaging to suppliers. Production of a quarterly supplier e-newsletter to be sent to all suppliers to communicate key and relevant messages such as: Market/DH news and issues (e.g. QIPP, AQP, Procurement strategy) NHS Supply Chain updates (e.g. National Distribution Centre, Tendering) Case studies Details of upcoming tenders Details of forthcoming supplier events Regular and structured supplier engagement meetings Programme for each buyer, senior buyer, director and subject matter expert to meet with their suppliers on a regular basis. From April 2013, these schedules have been rolled out and are now on-going and considered B.A.U. Structured meeting format to ensure suppliers receive equal information Supplier area of NHS Supply Chain website Review and improvement of information and references for suppliers Updated supplier pages to include useful information for suppliers quick reference Feedback forms for rapid interaction with NHS Supply Chain Contract Tracker - Instant access to timetable of tender notices Details of supplier events Improved tender documentation, training and support Social media Twitter posts for rapid messaging and notification CIM/Lync access to be built where possible to enable quick, cost-effective communications

Satisfaction Driver - Treats me as a valued supplier Supplier research highlighted that some suppliers, particularly those in the middle categories (51-80%), did not feel that NHS Supply Chain valued them and that they did not have regular communications from their buyers. NHS Supply Chain response Regular and structured individual supplier engagement meetings Programme for each buyer, senior buyer, director and subject matter expert to meet with their suppliers on a regular basis In effect, a systematic structured approach to supplier engagement. Consistent meeting format to ensure suppliers can air concerns, obtain clarifications, receive relevant performance information, and drive change to deliver greater value. Quarterly supplier partnership events to address key messaging: Supplier portal upgrade Marketing support Buyer toolkits New Supplier packs Cost out opportunities Strategic sourcing Partnership opportunities Supply chain efficiencies A secure and private portal, bespoke to individual suppliers for collecting and sharing information Improved communications of the wide range of free and cost effective marketing opportunities for suppliers to promote their products through the NHS Supply Chain catalogue and website In order to ensure all suppliers have a consistent awareness of the services, opportunities, reports and compliance issues of working within an NHS Supply Chain framework, NHS Supply Chain buyers will be provided with a Toolkit containing full details to support their suppliers. Suppliers will be given information packs when they are awarded onto an NHS Supply Chain framework. These will contain the details that new and existing suppliers will need to maximise potential of the oportunity. Suppliers will be kept informed of their main point of contact and any changes to personnel, which will affect their communications with NHS Supply Chain

Pillar 2 - Operations The Supplier Research highlighted some key areas for improvement including: Stock management Inefficient delivery - timed too strict Blue Diamond - too administrative, adds in cost E-direct - poor communication, loss of control Data transparency It is clear that many suppliers prefer the stocked route when dealing with NHS Supply Chain, but unless the NHS rationalises to a standard product range, the supplier base recognises that it would be both inefficient and impractical to stock all products. Therefore, the learnings from the Supplier Research focus on easing the difficulties that suppliers have encountered and improving the two-way communications that are essential to achieve this. NHS Supply Chain response To improve communications and increase transparency for all suppliers There is a new NHS Supply Chain Operational Supplier Guide for information on how to work efficiently on the delivery of products through all routes. Improved supplier portal, offering a secure portal, bespoke to individual suppliers for collecting and sharing information, including: Document sharing including supplier and global updates Live stock holding and availability reporting Demand reports including customer specific and MPC Demand planning forecasts for supplier products Electronic Trading data interchange section Blue Diamond order amendments E-direct order amendments and delivery confirmation Creation and printing of delivery labels Invoicing Creating and managing, ASN (Advanced Shipment Notices) Dedicated support desk Online user guides Future proposal to include: Facility to amend core stock range orders Business intelligence OTIF reporting (Inbound reporting) Consignment Stock (edc gold) Edirect order tracking Pillar 3 Systems and Processes

The Supplier research showed that suppliers wanted improved training in the use of NHS Supply Chain s tendering system, Intenda. It also called for the ease of use by SME suppliers through the Intenda process. NHS Supply Chain response Pre-tender meetings are now part of the tendering process within NHS Supply Chain and are considered best practice. Intenda user guides are available to all suppliers through the e-sourcing portal, and the NHS Supply Chain contracting team is running training seminars to support new and existing suppliers. They are producing an FAQ document to answer the non-technical issues from a supplier s perspective. NHS Supply Chain has implemented an SME policy to ensure that any barriers to SME participation in the NHS Supply Chain tendering and trading processes are removed. Pillar 4 Sector Specific Supplier Value Propositions The Supplier Research identified that many suppliers used the NHS Supply Chain route in response to customer preference, but that direct supply was their preferred option. NHS Supply Chain is working with the NHS Business Services Authority, key suppliers and Trade Associations to develop a supplier charter and value propositions that are relevant to the different routes to serving the NHS. In addition to the administrative and marketing savings that NHS Supply Chain currently communicates to suppliers, there is an on-going programme of partnership opportunities, which have been created following Supplier Partnership events that will present mutual benefits for all parties and deliver savings to the NHS. This programme will be further developed in response to the DH Procurement Strategy recommendations, where suppliers will be required to offer innovative cost saving solutions to the NHS. Pillar 5 Innovation The supplier research called for improved access to the NHS for new products and the removal of barriers for the adoption of innovative technologies, practices and products. NHS Supply Chain is not perceived as innovative and the framework agreements are considered to a closed door to new products until contract renewal phase. Satisfaction driver NHS Supply Chain could speed up the introduction of new products into the NHS NHS Supply Chain response Whilst it is acknowledged that the NHS itself is often resistant to innovation and clinical preference, or unit price, are often drivers of procurement decisions, NHS Supply Chain is committed to supporting suppliers who offer innovative solutions to the market.

The Medical Markets Supplier Board Innovation Special Interest Group has been established to examine the issues surrounding launching and adopting innovative products into the NHS. NHS Supply Chain has a dedicated Innovation team, which has implemented a scorecard for assessing innovative products, the whole life cost of the proposition and their target markets. This work is being done in cooperation with the NHS Business Services Authority, the Academic Health Science Networks and the DH.

Summary: NHS Supply Chain has a comprehensive program in place that is aligned with the supplier research. Much of the activity necessary is well established but what is clear is that an integrated communications plan that informs all stakeholders has not supported all activity effectively. A communications plan now supports the entire program and will ensure that all stakeholders receive regular updates on improvements, and have a variety of ways to communicate with NHS Supply Chain through a number of different mediums. This will ensure that joint performance and subsequent value benefits are accelerated on an ongoing basis.

NHS Supply Chain Medical Supplier Board Pre-Read 3 NHS Supply Chain Medical Supplier Board Metrics & Dashboard Special Interest Group Update 19 September 2013 To support the main purposes of the Medical Supplier Board a number of metrics & a dashboard were developed by a special interest group in early 2012. The content was developed to:- a) Reflect the key metrics that were important to the NHS and on which Board had influence b) Reflect the activity, progress and satisfaction of the membership to the Boards objectives In the light of the DH review of the Supplier Board terms of reference and discussions regarding the output Metrics of the Supplier Board, the Special Interest Group has not been convened since the June Supplier Board meeting. Secretariat, Louise Hillcoat has written to all Supplier Board members to invite inclusion of reciprocal links from each Trade Association website to the Supplier Board site and vice versa. Currently some Trade Associations have a link to the NHS Supply Chain website, but an additional link to the Supplier Board pages has been adopted by some. Others have expressed the view that they do not want to be seen to promote NHS Supply Chain as a preferred route to market. On-going analysis is being conducted on the website visitor statistics to identify where traffic is coming from and when reciprocal links are in place, traffic will be monitored from Trade Association websites into Supplier Board site. The Website traffic figures are now included in the Supplier Board metrics. OTIF Delivery service levels The differing performance in service levels for each supply route will be brought back into discussion at future Supplier Board meetings. Further insight into how inbound service levels, by supplier, and Trade Association will be possible when NHS Supply chain s Business Intelligence tool has been implemented. SDMA membership had raised the issue of differing performance from NHS Supply Chain s various NDC and RDCs and called for some transparency of service levels by distribution centre. This data is not yet available and will be circulated in due course.

Moodboard The NHS Supply Chain Customer Board has produced a moodboard, which offers a simplified view, with clear KPIs for the Board, the measures that state success against these KPIs, and a Red/Amber/Green status column. Should the Supplier Board look to adopt a similar dashboard structure to replace the current Moodboard?

SME Participation within NHS Supply Chain NHS Supply Chain remains consistent in its SME participation figure of 27% by sales value across both transacted and non-transacted sales. According to EU recommendation 2003/361 Total SME vs Non SME Spend Total - 1,407 m Number of Suppliers Total - 1383

Graphs demonstrating the proportion of Large, Micro, Small and Medium sized suppliers by portfolio Markets such as dressings, pathology and audiology are populated by a higher proportion of SMEs

Innovation The inaugural Special Interest Group on Innovation will take place on Wednesday 11 th September. David Pierpoint, Customer Engagement Director, NHS Supply Chain will present a summary of the outputs and actions from the SIG. The following section shows the Innovation outputs in line with previous presentations. The year-on-year scorecard sales shows a 30% growth due to increase in trust adoption levels Small increase in scorecard submissions since June we would expect around 6 per month. July was 6, August was 7 No new products have been launched through the scorecard would expect this to be around 10 per annum but there are 50 still being assessed (new processes for buyers to introduce innovative products require simplification in order to. Innovation - Scorecard Metrics Unique innovations that fall outside of the normal tendering process Innovation scorecard metrics July 2009 Aug 2013 Scorecard total submissions 297 Total successful submissions taken onto contract 28 (9.4% submission to contract rate) Total sales of innovative products 955k

Scorecard Submission Numbers Jul 2009 - Aug 2013 14 12 10 8 6 4 2 0 2009 2010 2011 2012 2013 Sales of products adopted through the Innovation Scorecard Year Sales Value No of products adopted 2010 100k 5 2011 289k 14 2012 299k 7 2013 Aug YTD 267k 2 Some products were introduced on pilot contracts and have been delisted, codes changed or adopted onto existing/new frameworks A number of submissions were submitted close to a tender renewal date, so suppliers are asked to respond to the appropriate tender Tender procedures designed to enable innovative product submissions Reasons for innovation scorecard low submission/acceptance ratio (%)

July 2009 August 2013

Successful Scorecard Submissions SME vs Non SME Trade Associations

Examples of trust adoption Product FCC093 Single use Anti-RSI Nail care set FWJ030 Tournistrip Single use Tourniquet EVC 043 Bio-Pax- Home Birth Delivery Pack Benefit innovative anti-shock handles and internal spring reduces repetitive strain injury reduced workplace absence and fewer clinic cancellations. innovative cost effective and single use tourniquet. impact on improving health single use item at reduced cost reduced cross infection risks All in one system containing healthcare consumables and a waste container for home birth Reduces cost, time, storage and waste Allows effective safe handling of clinical waste Example trusts with significant adoption Northern Devon Healthcare NHS trust Notts Community Health Partnership Leeds Teaching Hospitals Morecambe Bay Hospitals Trusts Central and NW London NHS Foundation trust Central Manchester University Hospitals Sheffield Teaching Hospitals Guys and St Thomas NHS Foundation Trust Units sold total 2012/2013 Sales value total 2012/2013 376 173, 509 4,613 204,970 164 29,958

September 2013 Supplier Board moodboard Issue NHS Supply Chain Ts and Cs Full understanding of role of NHS SC, tranparency of process, route to market, sourcng strategy Deliverable Revised T&Cs for suppliers to the NHS through NHS Supply Chain Clear definition of the role of NHS SC to include 3 year strategic overview and clarity of different supply channels Change Current Previous Status Status Action/Status Rationale * Develop SIG to inform and consult on the progression of NHS SC new NHS Supply Chain T&Cs * Ensure engagement across wider association membership * Feed into wider NHS Supply Chain T&Cs development plan * Present to Supplier Board fully detailing NHS Supply Chain role - Customer Value Proposition - Supplier Value Proposition - Supplier Research Request * Positive feedback received from board that transparency is valuable to improve strategi alignment across Suppliers and NHS Supply Chain. * Supplier research progress Supplier Board Mood Supplier Board Membership Mood Develop a set of Metrics and a Dashboard format to be regularly reviewed and updated Develop an SME strategy Generate Awareness/Clarity of wider NHS Landscape Produce Dashboard Strategy fully endorsed/signed off by Supplier Board Support DH initiatives as required e.g. Collaborative 'Call for Evidence' submission * Metrics endorsed by NPC, produced and presented quarterly * SIG agreed priorities for supplier board focus, agreed by Board Members * SIG formed to consult and support development of NHS Supply Chain research and guide the development of the SME strategy. * SIG convened to ensure full clarity of research findings, and further project to be scoped to develop the SME strategy. * Supplier Board submitted to the Call for Evidence and will be part of future consultations. DH feedback due March 2013 Reduce messaging/letters into DH and BSA Commitment from Supplier Board membesrhip to use Supplie Board as communication channel for all inputs and outputs from their associtations both positive and negative Standing Agenda item to agree messaging/items of escalation in NPC Shared best practice in response to medical market changes (eg: Barcoding, Benchmarking, DH Procurement Guidelines) Supplier Board membesrhip to use Supplier Board to share best practice and invite shared learning Standing Agenda item to invite best practice sharing in response market change

Website Visitor Numbers www.supplychain.nhs.uk\supplierboard Since its launch on 1 December 2013, the Medical Supplier Board website has received 1632 visitors. This is still considered a low figure and ways of pushing traffic through to the Supplier Board website are being considered, particularly in the light of Supplier Research results that point to a low awareness of the Supplier Board. The forthcoming Supplier electronic newsletter will contain a link to the Supplier Board pages, which will introduce suppliers to the wealth of information contained on the site. The number of repeat visitors is healthy, which implies that once a visitor has discovered the site, they are likely to revisit it. They spend an average of 2.5 minutes on the site, which implies that they use it for quick reference or to download content, rather than to read lengthy articles on the site. The number of new visitors to the site fell sharply to 23.5% from 61.4% in the previous period, which suggests that the period did not include any promotion of the site. Total Visitors (Year to Date) 1,632 Repeat Visit Ratio (Year to Date) 43% Average Visit Time (seconds) 153 The most visited pages were the Board Member page and the Home Page. The Terms and Conditions SIG page and the Contact Us form were also visited more regularly than others.

NHS Supply Chain Metrics for information only The previous conclusion of SIG was that these metrics, whilst informative, are not a key metric on which, at present, the Supplier Board have any influence. It was suggested that they should be included in the Supplier Board scorecard at the end of the pack. Therefore, the following slides are included as an Inform to the Supplier Board members.

Tender duration (Inform) The average duration for awards during August was 89 days, and the rolling average now stands at 85 days - both well within government target Future durations are estimated to be 82 days Contingency within contracting plans is currently averaging 30 days. This has reduced slightly from previous months, but plans with low contingency are being monitored weekly to ensure they remain on schedule NHS Supply Chain now has 190 contracts across 12 separate portfolio areas

Financials (Inform) Our cash collection and payment performance remain strong as indicated by DSO and DPO. Both DPO and DSO remain well below the MSA targets Days Sales Outstanding is a measure of how quickly customers are paying NHS Supply Chain Days Purchasing Outstanding is a measure of how quickly NHS Supply Chain pays its suppliers

40 Days Sales Outstanding 3 Month Rolling 38 36 Days 34 32 30 28 26 2013 2012 MSA Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec MSA 38.0 38.0 38.0 38.0 38.0 38.0 38.0 38.0 38.0 38.0 38.0 38.0 2013 30.4 31.6 29.4 33.3 34.2 33.4 32.7 32.9 2012 34.0 36.9 32.5 34.4 35.3 36.2 34.7 31.5 31.8 32.4 32.0 31.5 40 Days Purchases Outstanding 3 Month Rolling 38 36 Days 34 32 30 28 26 2013 2012 MSA Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec MSA 38.0 38.0 38.0 38.0 38.0 38.0 38.0 38.0 38.0 38.0 38.0 38.0 2013 29.8 30.1 34.0 36.9 37.6 32.4 34.0 34.9 2012 29.1 31.8 33.3 34.5 32.0 35.1 33.3 34.3 31.5 32.9 35.9 32.7