Background

An NHS Acute Trust in the South East was facing a projected budget deficit of circa £30 million in 2018/19. Leadership identified procurement inefficiencies as a key area for cost savings, particularly in non-pay expenditure (e.g., medical supplies, equipment, and services). The Trust launched a Cost Optimisation Programme aimed at transforming procurement processes and reducing waste.

Objectives

• Achieve a minimum of £8 million in procurement-related savings over 18 months.
• Improve compliance with NHS procurement standards.
• Reduce clinical variation in product use.
• Strengthen supplier relationships to leverage better pricing and service.

Actions Taken

1. Spend Analysis

• Conducted a detailed review of procurement data across departments.
• Identified over 400 suppliers with overlapping contracts and product duplications.

2.Category Management Approach

• Established cross-functional procurement teams by category (e.g., orthopaedics, diagnostics, catering).
• Introducedstandardised product lists and consolidated suppliers.

3. Collaborative Purchasing

• Partnered with neighbouring Trusts and the NHS Supply Chain to negotiate volume-based discounts.
• Adopted regional framework agreements.

4. E-Procurement Implementation

• Rolled out an e-procurement system for better tracking, order management, and analytics.
• Automated invoice processing to reduce administrative costs.

Results

• Achieved £10 million in savings over 16 months.
• Reduced the number of suppliers by 30%, improving efficiency and accountability.
• Cut non-essential product lines by 25%.
• Decreased average procurement cycle time by 30%.
• Boosted clinical satisfaction through better product consistency and availability.

Challenges

• Resistance from clinicians used to preferred products.
• Need for cultural change in departments not used to centralised procurement decisions.
• Initial cost of implementing new digital tools.

Key Enablers

• Strong executive leadership and clinical buy-in.
• Real-time data dashboards for spend tracking.
• Training and upskilling of procurement and clinical staff.

Lessons Learned

• Cost optimisation is as much aboutculture and behaviour change as systems.
• Clinical engagement is essential—especially for high-use areas like surgery and diagnostics.
• Investing in data analytics capabilities leads to more sustainable decision-making.