1. Portfolio/Number/Name:H/C 3 NHS Logistics Reform |
2. Programme/Activity: As part of NHSScotland's agenda for Modernising Support Services, SEHD launched the Logistics Project at the end of August 2003. The project is centred around implementing best practice logistics process and infrastructure across the entire NHSScotland supply chain in order to secure significant economic and service benefits. Key project activities include : - Process & Change Management - developing the work processes for the Logistics service and co-ordinating the rollout of the Logistics Strategy implementation across NHSScotland ( NHS Boards and Special Health Boards);
- Contracting and Supplier Management - positioning the supplier base to deliver service and cost benefits driven by in bound supply chain modernisation.
- Infrastructure development - ensuring that required physical and human resources are in place to support the delivery of best in class supply chain activity at both local and national level.
- IT Systems Management - supporting the supply chain change management process through the availability of best of breed IT functionality.
- Stakeholder Management - ensuring that an effective communications programme is in place and that focus is given to managing key stakeholders through the change via supporting and championing the project.
The logistics strategy which received FBC approval in December 2005 will enable NHSScotland to gain control over the supply chain for consumable products covering circa £600 million annual expenditure allowing NHSScotland to exert leverage on suppliers as to how goods are procured and delivered to meet the needs of the NHS in Scotland at least cost. In addition time savings will be achieved through the release of clinical staff time from product ordering activity. Non-cash/time savings will also be achieved through the release of space at Hospital level. |
3. Savings | 3.1 Current target; £m | | 2005-06 | 2006-07 | 2007-08 |
Cash | 0 | 2.5 | 7.5 |
Time | 0 | 0 | 2.0 |
3.2 Efficiencies delivered; £m | | 2005-06 | 2006-07 | 2007-08 |
Cash | 0 | - | - |
Time | 0 | - | - |
4. Accountable Officer for delivery | Dr Kevin Woods |
5. Project Manager | Mr Ross Scott |
6. EGDD Portfolio Manager | Rowena Simpson |
7. Description of efficiency and actions to be taken | 7.1 What is the efficiency improvement? How will the efficiencies be made? Savings are in the main dependent on the acquisition and development of a (single) NHSScotland National Distribution Centre ( NDC) located in Lanarkshire. The logistics infrastructure proposed is common best practice associated with the private sector as evidenced by Tesco, Morrisons and Asda. Perhaps more relevant, is Boots distribution centre based at Bellshill supplying all outlets in Scotland from Wick to Dumfries with a range of products not dissimilar to that used by NHSScotland. The main savings will be derived from centralised purchasing delivering better product prices from the improved logistics infrastructure and through right sizing NHSScotland physical and human logistics infrastructure, and by the implementation of a new Ward Product Management system. |
7.2 What are the main actions that are needed to secure the delivery of this efficiency improvement? The action required is that the NDC is acquired and commissioned by the logistics team and operated effectively and efficiently using best practice processes supported by appropriate IT. It is also important that local infrastructure and process changes are implemented by NHS Board Chief Executives and Heads of Procurement to ensure that the efficiency improvements are maximised. There is, therefore, a key dependency on NHSScotland participating in this project and taking responsibility for implementing business change at both a local and national level. Good change management and communication activity is important in this respect. NHS Chief Executives have formally endorsed the Logistics FBC as have staff / partnership representatives. |
8. Associated costs | 8.1 Are there any development or redundancy costs associated with the delivery of this efficiency? There are no development or redundancy costs associated with this project This project will result in potentially significant opportunities for staff, with new posts being created, redeployment and training within the new logistics infrastructure and in other areas within each Health Service organisation. The gross recurring saving is approx £18m pa with gross recurring expenditure of approx £10.5m. |
9. Measurement | 9.1 What are the inputs that will be measured? The current costs associated with Logistics activity have been captured within the Logistics FBC as have the projected future costs and future service level performance metrics. A range of Key Performance Indicators ( KPI's) have been developed which will track cost and service performance against the metrics detailed within the FBC. The high level KPI's relate to Customers / Suppliers and Operational activity. |
9.2 What are the outputs that will be measured? The main outputs are savings achieved against plan. These predominately relate to product price reduction / headcount reduction and change to local infrastructure. Additionally service performance will be measured against published standards which are embedded in Service Level Agreements ( SLA's) with the customer Health Boards. |
9.3 What is the baseline for inputs and outputs? The baseline is 2004/05 expenditure on distribution and 2004/05 volume transported. |
10. Quality cross-check | 10.1 What quality indicators are being used to ensure that quality of service is maintained or improved? Service levels performance metrics will be published and embedded within customer SLA's. Monitoring of performance will be ongoing and reported continuously against agreed KPI's which reflect the performance metrics. The head line target is to achieve a 98% first time, on time, in full delivery of product requested. Freeing up the time of front line staff spent on ordering and processing goods at ward level, and the reduction of inventory (and possible waste) within hospitals, will additionally be monitored. |
11. Monitoring | 11.1 What are the arrangements for monitoring the delivery of efficiencies? Monthly Management Accounts and via KPI monitoring arrangements. |
12. Reporting | 12.1 What are the arrangements for reporting the delivery of efficiencies? Savings will be formally reported at NHSScotland and customer level on a quarterly basis. |
13. Dependencies | 13.1 Explain if your efficiencies are dependant on legislation or other structural changes being achieved. Savings are not dependant on legislation. Savings are dependent on the acquisition and operation of the ( NDC) and on the implementation of local infrastructure and process change at local level. |
14. Use of savings | 14.1 How are the efficiencies released from improvement activity being used to improve front-line services? Funding allocations from SEHD to NHS Boards will not assume these efficiency savings. The cash releasing efficiency savings will be retained by NHS Boards and used for developing and/or delivering local patient services. |