UPDATE FOR SUPPLIER BOARD MARCH 2012
NHS Supply Chain engagement of Small and Medium Enterprises (SMEs)
Progress Report (initial report appendix 2)
Four key areas of research have now been defined in order to ensure the landscape is fully
understood from all perspectives. Engagement is now well under way as detailed below.
1.Supplier Engagement Focus Groups
Taking time to really listen, understand and gain insight into the key concerns, challenges and
demands of SME’s is the aim of the focus groups. In order to maximise the output the engagement
groups have bee divided into three as detailed below.
Trade Association Representatives
SME’s on contract
SME’s not on contract
Trade Association Representatives
The following members have fully engaged and meetings have now taken place, or are scheduled
to take place, over the next six weeks.
Tony Davis – Medilink
Stuart Chisnell – BIVDA
Mike Hoskins – SDMA
Ray Hoskins – BHTA
Peter Staff – XoGraph
SME’s on Contract
All procurement Trading Managers have been contacted and asked to nominate suppliers that they
believe can add, and will get value from, engagement in the research.
The suppliers below have fully engaged and meetings have now taken place, or are scheduled to
take place, over the next six weeks as detailed below.
Guy Braverman – Gama Healthcare
Stephen Mew – Guest Medical
Debra Willoughby – GWPrice
Sara Cole – Lyal Willis
Beverley Rodgers – Decree Thermo
Simon Charlesworth – Bailey Surgical
Nicolas Perry - Assut
Michaela Fraser – Kapitex Healthcare
Alan Edwards – Asep Healthcare
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SMEs not on Contract
Throughout the procurement calendar buyers are often contacted by suppliers who, for a number
of reasons, have not managed to engage successfully in the tendering process even though they
believe their product ranges could add value, innovation and growth to the NHS. Engaging with this
group of suppliers will give NHS Supply Chain an additional perspective of the landscape.
Suppliers engaged to date are detailed below
Andrew Reddy – Alliance National
Fred Popp – Food Connections
Andrew Wileman – Premiere Quality Foods
Ron Wilson - Pacitas
Further contacts are being made to ensure this group represents a wider representation of the
SME market.
For each of the three special interest groups a set of questions have been created in order to
comprehensively capture and record all key learning. The questions will be calibrated and
expanded as the meetings progress. They are designed to cover the following areas of research:
Business and background
The reality of engaging with the NHS
The reality of engaging with NHS Supply Chain
How to improve access and communication pre- tender
How to improve Tendering and Procurement Processes
How to improve supplier engagement post tender
Best Practise and shared learning from inside and outside of the NHS
Early Insights
At this early stage of engagement the meetings and conversations that have taken place to date
have already sparked a number of great ideas and potential actions and given NHS Supply plenty
of invaluable insight and learning. Outline structure for the paper in June is emerging as follows.
Pre – Tender - Access and Communication
In Tender – Process and Education
Post Tender - Support and Development
Next Steps
It is forecast that all meetings will be completed and output collated by the end of April. In addition
to face to face meetings a second phase of research with a wider community of SMEs through the
use of an online questionnaire will then be issued to the members of the engaged Trade
Association Representatives. This will open up the research to a much wider audience which time
and resource for both parties would otherwise prohibit.
2. Stake Holder Engagement
It is crucial that any emerging strategy takes its learning from other work streams outside of NHS
Supply Chain to ensure that thinking is aligned and in step.
On March NHS Supply Chain met with Sandra Barrow from the Department of Health. As Head of
Innovation Procurement, Sandra is extremely aligned and enthusiastic about the level of research
that NHS Supply Chain is undertaking. Shared learning exists with a number of key Department of
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Health led programs such as The Technical Strategic Board and The Small Business Research
Initiative.
Next Steps
NHS Supply Chain has committed to keep communication levels high and share all meeting dates
and progress reports. Sandra expressed an interest in joining the supplier meetings where possible
and committed to communicate progress internally to John Warrington.
3. NHS Supply Chain- Internal process improvement
Research is focussed on three areas.
3.1 Improved reporting levels and metrics
Reports are now run on a quarterly basis. These reports show:



% of total sale that are from SMEs over the last 12 months
% of the supplier base that are SMEs over the last
% of the total number of contracts that are currently awarded to SMEs
The plan is to adapt systems to capture relevant data for each supplier during the tender process,
to identify against their SME criteria, for on-going share analysis, and evidence of the effectiveness
NHS Supply Chain’s strategies. As stated in March’s paper, this has to be fair and equitable to all,
within the confines of EU Procurement regulations eg: EU procurement regulations do not permit
any favourable treatment of SMEs in a tender process.
3.2 Tender documentation
Work is under way with the Intenda team to understand where NHS Supply Chain can improve the
documentation both pre and during the tender process to ensure challenges that are unique to
SME’s are reduced. A great deal of work has gone into making the new version of Intenda,
scheduled to be launched in June, much more time and user friendly for all suppliers which will
benefit SME’s.
3.3 Shared Learning and Best Practise
Research is underway to capture best practise and current good processes and ways of working in
order to be able to propose examples that could be turned into scalable every day ways of working.
Engagement is also taking place with other work streams such as Innovation to ensure that output
supports, and is aligned, but does not duplicate.
Next Steps
It is forecast that all three research areas will be completed by the end of April. This will allow an
honest appraisal of our current practise to be documented and proposals for improvement to be
presented as part of the June paper.
4. External Markets
The final area of research is into markets outside of the NHS. Within our procurement team there is
a vast amount of experience from other industries both public and private. Connections have been
made with individuals to share learning and best practise. How other buying strategies ease the
access to an SME may also proved simplification and hence scalability for NHS Supply Chain.
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West Yorkshire Police
Morrisons
Asda
Next Steps
The four work streams of research will form the foundation of a paper to be presented to the
Supplier Board in June. It will outline all learning and enable a picture to be painted of what a good
job could look like together with a set of proposals that will form the basis of future strategic
direction.
Appendix 1- Example of SME Engagement Questions and resulting early Insights
Appendix 2 - NHS Supply Chain engagement of Small and Medium Enterprises (SMEs)
Initial report
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Appendix 1
NHSSC SME Engagement
Project
Trade Association Special Interest Group
Trade Association Special Interest Group
1.
Name
Medilink
2.
Please specify nominated representative
Representative ………Tony Davis……………
Company ……………Medilink………………….
3.
How many SME’s does your Trade Association represent?
Approx 1000 companies subscribe to their services
4.
Please give a brief summary of the role of your company in representing SME’s in the
market place.
We are a National Technology business support organisation. Our aim is to increase the
viability of manufactures, service providers and suppliers medical technology in the NHS.
We help companies from concept to commercialism. We provide them with web based
information about tenders and keep them up to date with market changes. We provide
bespoke market research for investment, diversification and research and development.
We have also organised exhibitions, innovation days and road shows. We also support
global companies investing in the UK market as well as promoting the export of products
and services abroad.
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5.
What do you see as the key milestones to success for your business over the next three to
five years?
Gaining access to the NHS for our subscribing customers is our key goal. Growing the
number of subscribing members is now also an important goal as we are no longer a
government-funded company. Increasing the level and speed of engagement with
innovation in the NHS is our goal. Currently the UK lags far behind other nations,
especially in Europe being seen as an extremely late engager of ‘the new’.
6.
What do you see as the major challenges for SME’s in the current climate?
The key challenges are:
Cash flow. Bridging loans are a thing of the past which used to provide a safety net if
payments were late or delayed. This is a major concern, especially for the small and start
up enterprises. They are seen many companies go under since the banks are no longer
lending.
NHS procurement priorities are cash releasing savings and low prices. Often SME’s
cannot compete with larger companies to offer this value proposition.
NHS Procurement appears to be risk averse with Innovation seen as too high a risk to
take.
Investment to take a concept from idea to commerciality is no longer available.
The NHS is far from one market. Even when products are clinically tried and tested and
proven to show commercial savings in one Trust this does not proved a gateway to the
entire market
Compared with other European markets UK procurement takes to long to get products
awarded and to market. This is forcing many companies to look abroad for business. Not
being able to show endorsement from the country of origin greatly prohibits engagement
in other countries.
7.
What is your business doing differently to combat the challenges posed by the current
economic climate?
We are concentrating on the access to market side of our business and working to
maximise the level of information and networking we can provide our customers. We have
launched our Tender and Lead site which is a portal that allows subscribing customers
access to up and coming Tenders from all the national and regional Tendering bodies.
They can cut and narrow the search in order to find Tender applicable to their business or
products.
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8.
What value propositions do you believe SME’s bring to the market that perhaps larger
businesses do not?
Innovation and new ideas. Market growth. Diversity.
9.
How are the current NHS reforms affecting your business and those of SME’s?
We have had to reduce down the level of support we can give business in the concept to
commercialism stage as we no longer Government Funded. Road shows and ‘dragons
den’ workshops were extremely well received by the supplier base as we were able to give
them industry and clinical guidance on how to take the idea further to be fit for a potential
tender.
The NHS is becoming increasingly fragmented which makes access complicated and
costly.
Budget cuts mean that investing in new businesses is seen more and more as too high
risk
10.
:
What do you see as the major barriers to accessing the NHS for SME’s?
A lack of help and direction in understanding what the NHS and procurement hubs/
NHSSC expect from them.
A lack of upfront investment and cash flow support.
Unnecessary, repetitive, costly and time consuming processes in the Tendering Process,
especially in regards to the PPQ stage.
Unfair weight attached to questions concerning Policy, i.e Sustainability. Time is spent
attaining accreditation in certain areas that do not add value.
A lack of knowledge and communication networks to enable all opportunities for
engagement and potential business to not be missed. i.e workshops communication days.
tender of
construction
thathave
is complicated
and can
resource
hungry
to complete.
11.Lotting
What and
examples
good practise
you seen that
be shared
from
inside and
outside of the Public Sector that have made business easy for SME’s?
12.
What kinds of good business practise do you believe would make it easier for SME’s to
gain access to the NHS?
If NHS Supply Chain were to link up with Medilink, there could be a potential win win for
all parties. NHS Supply Chain could have7a portal to their website improving their
communication and engagement with the SME’s. The belief is that this is currently low
and late. NHS Supply Chain could help Medilink re-establish its local and national
program of road shows and communication days by tapping into existed communication
days. SME’s would benefit as the level of information and access to market would
increase and potentially the gap between innovation and commerciality would close.
13.
How well does NHS Supply chain communicate to the market place? What could it do
differently and/ or better?
Perception is that as a direct result of being a national provider to the NHS our number
one priority is to drive down cost in the supply base and deliver savings to the NHS we
favour large businesses.
Belief is that our communication is poor on a number of levels; in keeping the supply
base well communicated to regarding up and coming opportunities. In communicating
changes to the procurement landscape that might effect SME’s. In the style and level of
information needed for the Tender process.
There is also a belief that NHS Supply Chain could do a great deal more to help SME’s
understand what they need to do to even get to Tender Stage and be competitive and to
understand the reasons they have not bee successful.
14.
Pre, during and post Tender what are the key things that make it difficult for SME’s to
engage in the process?
As above, a lack of knowledge about the opportunities.
A lack of resource and know how to complete the Tenders.
A lack of finance to complete Tenders
A lack developed policy to score highly at PQQ stage.
15.
If you were running NHS Supply Chain what would business practises would you introduce
or do better to help SME’s gain access to the NHS?
A huge opportunity in the concept to commercial part of the process that NHS Supply
Chain are not engaging in.
Opportunity to reduce the red tape around the initial stages of the tendering process.
Only having to complete PQQ once for all tenders and update annually would save time
and money.
Much higher level of general communication and guidance both via the web and through
a national program of 'face to face' surgeries and dragon den events.
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Appendix 2
NHS Supply Chain engagement of Small and Medium Enterprises (SMEs)
Initial report
1. European Commission Definition of Small Medium Enterprise
Enterprises qualify as micro, small and medium-sized enterprises (SMEs) if they fulfil the criteria
summarized in the table below.
In addition to the staff headcount ceiling, an enterprise qualifies as an SME if it meets either the
turnover ceiling or the balance sheet ceiling, but not necessarily both:
Enterprise category
medium-sized
small
micro
Headcount
< 250
< 50
< 10
Turnover
≤ € 50 million
≤ € 10 million
≤ € 2 million
or
Balance sheet total
≤ € 43 million
≤ € 10 million
≤ € 2 million
2. Government/Department of Health positioning
The Coalition’s ‘Programme for Government’, published after the General Election in May 2010,
outlined the overarching commitment to “promote small business procurement, in particular by
introducing an aspiration that 25% of Government contracts should be awarded to small and
medium-sized businesses and by publishing Government tenders in full online and free of charge”.
The Government has since repeatedly expressed its belief that SMEs “have a vital role to play in
the growth of the UK economy” and “can offer more innovative and imaginative, more flexible and
more cost effective products and services”.
Successive announcements of measures and initiatives demonstrate progress towards the
Government’s objective to remove unnecessary obstacles that make government procurement
difficult for SMEs, make the system more competitive between suppliers, and provide billions of
pounds worth of new business opportunities for SMEs.
3. BSA SCM view
NHS Supply Chain has a key role to play in enabling SME engagement. This was outlined at the
inaugural Supplier Board meeting in September. NHS Supply Chain has a positive approach for
engagement with SMEs. Further progress can still be made in enabling SMEs to access the NHS
through NHS Supply Chain.
4. Current evidence of NHS Supply Chain SME relationships
NHS Supply Chain has provided the following information on their current engagement with SMEs:
NHS Supply Chain has undertaken a review of current suppliers to ascertain the number and value
of sales from SMEs and the percentage of contracts awarded to SMEs. NHS Supply Chain
identified SMEs by reviewing a combination of Dun & Bradstreet reports, suppliers own data
provided and suppliers websites to access stats to compare against the EU definition of SMEs.
These figures have not been audited by BSA but in broad terms the results derived by NHS Supply
Chain demonstrate:


16%* of sales are from SMEs over the last 12 months
53% of the supplier base are SMEs as at September 2011
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
36% of the total number of contracts are currently awarded to SMEs
NHS Supply Chain plans to adapt systems to capture relevant data for each supplier during the
tender process, to identify against their SME criteria, for on-going share analysis and evidence of
the effectiveness NHS Supply Chain’s strategies. This has to be fair and equitable to all, within the
confines of EU Procurement regulations eg: EU procurement regulations do not permit any
favourable treatment of SMEs in a tender process.
5. NHS Supply Chain good practice to encourage SMEs
NHS Supply Chain has identified areas where they can demonstrate good practice in dealing with
SMEs. These include:
 Full procurement work plan published on NHS Supply Chain’s website for ease of visibility and
access (after website registration)
 Local supply can be translated into national coverage through NHS Supply Chain network if
the SME can meet i) national volume requirements ii) if the product is ambient
 Once only tender response to reach NHS – SMEs don’t have to respond to 350 individual
trusts which can be resource intensive for a small enterprise
 NHS Supply Chain have a web based ‘Innovation scorecard’ to fast track new, innovative
products, enabling SMEs to more easily and quickly access the NHS market
 Pilot project approach is available to test the market
 Local mini competitions able to be run under national framework agreement to enable local
supply where SME cannot handle national volume, enabling SMEs to tender within any
capacity limitations
6. Current challenges to dealing with SME’s
There are a number of challenges to dealing with SMEs which NHS Supply Chain’s strategy must
consider. These include:
6.1 SME perspective (as perceived by NHS Supply Chain):
 Pre Qualification Questionnaire process can be onerous
 Electronic trading criteria doesn’t suit some SMEs
 Intenda based tendering process is complex which may discourage SME participation
6.2 NHS Supply Chain perspective – risks in engagement:
 Effective management of a larger, more fragmented supply base has administrative and
resource implications for NHS Supply Chain
 SMEs can be slow to respond to requests for information as they are under resourced and
often employees hold dual roles. Enabling SMEs to deal with NHS Supply Chain differently to
accommodate these issues may present legal risk in conflict with Public Contracts Regulations
 Cash flow for SMEs is more critical and hence financial stability important to consider
 Potential further disaggregation of volume across multiple small suppliers may impact on ability
to leverage spend to drive value for the NHS
7. Next steps
The Supplier Board, established by PICD in Sept 2011, will undertake research with SMEs to help
further develop NHS Supply Chain’s strategy to enhance access for SMEs to the NHS market.
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Trade Associations are represented on the Supplier Board and are key to engaging their
membership in supporting this research agenda by promoting the concept across their SME
membership and to engage in a review of the findings to prioritise areas of opportunity for process
improvement.
A chair should be appointed and members recruited for a Special Interest Group to identify,
simplify and maximise the opportunities for SME’s.
Finally, recommendations will be presented to the Supplier Board on the basis of which further
work may be initiated.
Appendix 1 outlines the special interest group brief
Appendix 1
Outline brief for Supplier Board SME research
Background:
NHS Supply Chain currently engages across a wide range of SMEs to enable the NHS to access high quality
healthcare products. SME framework participation tends to focus on innovative products and local supply,
particularly in areas such as catering products.
NHS Supply Chain strives to champion the SME agenda within the NHS and to this end, would like to establish a
number of focus groups during Winter/Spring 2012 to engage with existing and potential SME providers to the NHS
and understand better concerns, opportunities and steps to enable better access.
To this end, NHS Supply Chain has engaged the support of Trade Associations through the Supplier Board to
establish the brief and engage participants from their membership.
Target audience:
Medical device suppliers to the NHS or private healthcare market.
Two special interest groups targeted at micro/small businesses and two special interest groups targeting medium
size enterprises (based on EC definitions)
12 attendees/organisations represented per group
Timescale:
Qtr 1 2012
Group outline agenda:
Group format would include a brief introduction to NHS SC and an outline case study of how we currently work with
SMEs, to be followed by a 2 hour discussion covering:
1.
2.
Understanding of NHS/Public sector e.g.
a. Views on implications of current NHS strategy
b. What sources are used to gain information
c. Depth of understanding of EU procurement regulations
Perceived barriers to accessing the NHS e.g.
a. Access to info?
b. Procurement processes?
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3.
4.
c. Systems?
d. Logistics/supply chain barriers?
e. Cash flow/financial barriers?
f. Legislative barriers?
Examples of good practise for easy access e.g.
a. Where is business ‘easy’?
Understanding of NHS SC, e.g.
a. Role
b. Scope
c. Processes
d. range
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