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Commercial Best Practice 1. Locally lead the NHS


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  • COMMERCIAL BEST PRACTICE A useful synopsis of successful commercial management is research into organisations who achieved high performance in procurement (as defined in section 2) with proven supplier management and consistently higher documented savings than their peers. Such research outlines that procurement can be defined against four procurement processes (strategy, sourcing and category management, requisition to pay, and supplier relationship management) and three key enablers (workforce, organisation and technology) as in the diagram below Masters - roughly 10 percent of companies that consistently outperform their peers – exhibited certain traits: lower cost and higher productivity were all marks. Masters were shown to add greater value because they incorporated their broader strategic activities into the procurement process and operated integrated well managed processes built on sound business enablers. It is of note that terms such as strategic sourcing and category management are widely used as can be seen in the AT Kearney methodology described in Section 2. These references demonstrate to having additional process steps in their procurement armoury. Commercial expertise of key managers is required in this extended procurement process, whether they be called commissioner or procurement lead. The wider skill set they both must have are: In depth supply market intelligence (who current or alternative suppliers are, what they are capable of, now and in the future) Deep internal specification knowledge, able to clearly articulate the health outcomes that are required. This powerful combination of increased knowledge of external providers and internal needs must then be combined with commercial acumen to develop the sourcing strategy (what should we commission, for how long and from whom) before the traditional element of procurement even begins, with the tender and contracting processes. These extra steps are now a commonly accepted process extension in procurement, often referred to as strategic sourcing. Category Management extends the concept of strategic sourcing to the role of someone who sources a defined range of related services and materials (category) multiple times across an entity, using a strategic sourcing process. Finally the commercial skills expected of a key manager in high performing procurement and commissioning include excellent supplier management. Knowing how to define service agreements, and then performance manage providers so they are both contracted for and deliver continuously improving, yet cost effective outcomes. It is also of note from the Master’s survey referenced here that: Masters have a clear mandate from top management and full accountability to achieve big business impact (innovation, cost reduction, etc.) 80% of masters measure procurement performance; a clear definition of value is shared throughout the company to drive purchasing decisions. Masters undertake strategic planning (3–5 years exploration) proactively i.e. looking at future business needs/identifying trends to plan supplier selection strategy/relationship to guarantee supply at the right cost.
  • In the exercise I would argue that you went through these procurement stages There was some analysis A bit of planning The doing stage But perhaps not a great deal of reviewing unless something went terribly wrong. The point I’m trying to make is that the commercial or procurement process is not really a black art and that to some extent we exercise the process in our daily lives. Provided we have the tools and the discipline we ought to be able to transfer this skills into our business
  • Therefore we can integrate the two depiction to create a series of integrated charts Which we can then link to the WC Competencies we show the elements on which we need to concentrate if we are to leverage competency
  • Analyse Needs Analysis – to identify current and future needs Risk Analysis – the risks involved in implementing change Procurement strategy Strengths and weaknesses of suppliers Plan Gap Analysis – to identify what is being provided and what is needed Design services to meet needs Developing service specifications and deciding on contract type and terms Do Change management – decommissioning services that do not meet the needs Tendering requirements and letting contracts Contract management and communication with providers Review Identifying any change in population Amending specifications in line with changes Monitoring and reviewing contracts
  • It should be noted that the modern procurement professional typically combines their technical knowledge with project management skills which means PCTs don’t necessarily need different individuals for these roles. Asking this person to perform the full skills set of 12 capabilities is though far from practical and not recommended. What is necessary is for the fulcrum procurement role to take an active part into each one of these disciplines. This will mean working directly with the different staff members at the various stages along the commissioning cycle.
  • I have tried to break out the key elements of the Integrated procurement Framework here
  • From the models that we’ve looked at we can summarise Commercial Best practice here. This is the conceptual architecture that is now being web designed with PASA The GPF can be applied to different levels of commissioning e.g. strategic plans, to joint care area plans, to PBC plans to care pathways Built from desk based research of all the commissioning information and lifecycles we identified and our own experience. The GPF is made up of 3 stages, 1. strategic planning – use in care pathway work 2. Acquisition and 3. Performance Management and within each stage is a series of steps detailing a number of activities, with tools and templates to support a commissioner implement WCC commissioning. Reviewed by 4 PCTs who provided very positive feedback and by DH, NHS Improvement and Innovation Institute, Primary Care Contracting, NHS Confederation
  • Transcript

    • 1. Commercial Best Practice
    • 2. 1. Locally lead the NHS 2. Work with community partners 3. Engage with public and patients 4. Collaborate with clinicians 5. Manage knowledge and assess needs 6. Prioritise investment 7. Stimulate the market 8. Promote improvement and innovation 9. Secure procurement skills 10. Manage the local health system 11. Make sound financial investments Where Procurement Skills have Impact ? World Class Commissioning Competencies
    • 3. PROCUREMENT SKILLS 1. Locally lead the NHS 2. Work with community partners 3. Engage with public and patients 4. Collaborate with Clinicians 5. Manage knowledge and assess needs 6. Prioritise investment 7. Stimulate the market 8. Promote improvement and innovation 10. Manage the local health system 11. Make sound financial investments
    • 4. 2 3 4 5 6 7 8 9 10 11
        • Strategic Sourcing
        • Supplier Relationship Management
        • Supply Chain Theory
        • Market Engagement and Analysis
        • Business analysis and commercial planning
        • Stakeholder/Customer Relationship Mang
        • Project Management
        • Spec Dev, Tendering, Legal and Regulatory
        • Commercial, Finance, Budgetary, Accounting
        • Contracting and Negotiation
        • Market Management
        • Contract and Performance Management
        • Contractor and Supplier Management
      8 9 10 1
    • 5.
      • 1. Analyse
        • Undertake Opportunity Assessment
        • Service/Needs Review
        • Data Collection and Analysis
        • Benchmarking
        • Market Analysis
      • 2. Plan
        • Establish Stakeholder Groups
        • Demand management
        • Develop Procurement Strategy
        • Develop Project Plan and Risk Register
        • Use best practise models to develop Expressions of Interest, Pre-Qualification Questionnaires, Specifications, Invitation to Tenders, Evaluation Criteria, Draft Contracts, SLAs and KPIs
      • 3. Do
        • Manage the Tender Process
        • Provide Legal Advice and Contract Drafting and Production
        • Negotiate Contractual Terms & Conditions, Price and Performance
        • Contract Award and Implementation
      • 4. Review
        • Develop Supplier Relationship Management
        • Ongoing Supplier management against Contract Terms, SLAs and KPIs
        • Benefits Tracking
        • Periodic Stakeholder Reviews
      Procurement Stages
    • 6. Commissioning Cycle and Competency 9 - Procurement
    • 7. Source: IPC framework for joint commissioning and purchasing of public care services - CSIP Procurement forms an integral part of the process...
      • Commissioning and Procurement examples:
      • 1. Analyse
      • Current & future needs
      • Suppliers strengths and weaknesses
      • 2. Plan
      • What is being provided and what is needed
      • Developing service specifications and decide on contract type and terms
      • 3. Do
      • Decommissioning redundant services
      • Tendering requirements and letting contracts
      • 4. Review
      • Identifying any change in population
      • Monitoring and reviewing contracts
      Integrated Commissioning
    • 8. Review Plan Do Analyse PROCUREMENT PROCESS AND SKILLS COMMISSIONING PROCESS Gap Analysis Joint commissioning Strategy Service Design Change Management Budget & Market Management Strategy Monitoring Performance Management and Review Purpose and Guidance Market Analysis Resource Analysis Risk Analysis Supply and Demand Analysis Procurement forms an integral part of the process 1 2 3 4 3 4 4 5 6 7 7 6 8 8 8 9 10 10 11 11 2 2 2 8 7
    • 9. PURCHASED HEALTH CARE COMMISIONING SKILLS SET Project Management Operations Commercial/Procurement Medical/Clinical IM&T Legal and Regulatory Finance Communications
    • 10.
        • Market Engagement and Analysis
        • Business analysis and commercial planning
        • Project Management
        • Strategic Sourcing
        • Supplier Relationship Management
        • Supply Chain Theory
        • Stakeholder and Customer Liaison and Relationship Management
        • Specification Development, Tendering, Legal and Regulatory
        • Commercial, Finance, Budgetary and Accounting
        • Contracting and Negotiation
        • Market Management
        • Contract and Performance Management
        • Contractor and Supplier Management
      World-class Commissioning identifies Procurement as one of the key organisational competencies that PCTs need to secure to deliver health and care services, these skills comprise: Procurement Skills
    • 11. Key Statements of Procurement Maturity Procurement impact / value Board visibility and interaction Demand management, innovation and engagement Management information Policy and process compliance Sourcing / market management Purchasing processes Supplier relationship management Collaboration Green / sustainable The PCT recognises that the benefits of procurement are greater than cost reduction, and procurement supports the strategic agenda of the PCT Procurement elements of commissioning are represented and addressed at board level The PCT systematically challenges demand, introduces innovation and optimises resources whilst engaging with clinicians and other stakeholders The PCT has full visibility of its external spend, provider performance and commissioning function performance The PCT shows high levels of compliance to policy, processes and contracts established or selected by the PCT The PCT has commissioned the right contracts, with the right providers, through the right route, in full knowledge of the options and how they will meet their needs The PCT is acquiring all products and services through an efficient purchasing process The PCT is developing effective relationships with key providers The PCT is taking advantage of collaborative opportunities and is aware of the potential benefits and value brought by collaboration The PCT is maximising social and economic benefits and minimising damage to the environment through the services it commissions
    • 12. Aligning the Procurement Diagnostic with WCC X X X Compliance Board involvement Recognition of wider benefits X X X Maximising social and economic benefits X X X X X X X X Collaboration X X X X X X X Effective relationships with supplier X Efficient procurement processes X X X X X X Correct contracts and providers X X X X X X Visibility of spend and performance X X X X X X X X X Demand management, innovation, stakeholder engagement Make sound financial investments Manage the local health system Secure procurement skills Promote improvement and innovation Stimulate the market Prioritise investment Manage knowledge and access needs Collaborate with clinicians Engage with public and patients Work with community partners Locally lead the NHS WCC Competency Maturity Statement
    • 13. The Blueprint is based on a framework which covers all the key activities of a PCT as a commissioning organisation A.T. Kearney House of Commissioning* 1. Strategy, Organisation & Governance 5. Segment strategy & Implementation 4. Health Market Analysis 6. Segment & Provider Management 9. Performance Management Knowledge / Information Management 12. Support Functions (HR, Finance, Legal, IT, Estates) 3. Clinical Leadership 2. Public Health Management Strategic Commissioning 11. Talent Management & People Development 10. Knowledge & Technology Management Processes People (1) Information & Data
      • Provides a dedicated market management role over three “dimensions” (segment, provider and system)to ensure strategies are delivered,
      8. Programme & Change Management 7. Stakeholder Engagement & PPE Notes: (1) Includes skills, knowledge and behaviours * Adapted from A.T.Kearney’s House of Purchasing and Supply SM Sources: AT Kearney
      • Centre-led strategy for commissioning that is linked to the PCT’s overall Strategy and Operating Plan
      • Multi-year plans for leveraging provider market opportunities
      • Greater focus on strategic vs transactional activity
      • Deployment of advanced techniques to model current and future needs – identifying trends and shaping provider markets
      • Priorities are identified based on a clear set of goals and an understanding on the market opportunity
      • Categories are assessed for collaborative sourcing opportunities
      • Strategies are developed based on a deep understanding of the current and prospective provider market – eg, non- traditional providers
      • Should cost analysis is used to support provider discussions
      • Pro-active and systematic measuring of commissioning outcomes
      • Measures linked to the overall goals of the organisation
      • Broad understanding of specific role in supporting overall commissioning goals – eg, recruitment strategies requiring greater engagement with universities; legal considerations relating to market strategies
      • Data across the full spectrum of providers/services available in a form to support commissioning activity
      • Category strategies , contracts , etc, are stored electronically and readily available to key stakeholders
      • Commissioning is directly engaged in with patients to define requirements
      • Proactive and reactive media management processes
      • A systematic process for assessing future commissioning needs based on capabilities, skills, etc
      • Talent identified and nurtured – use of individual development and retention plans
      • Use of a range of contract types based on need
      • Provider management covers strategic as well as operational goals
      • Supporting commissioning process through market-facing specification improvement initiatives
      • Provides clinical leadership, governance and assurance
      Not Exhaustive
    • 14. D E M A N D GATHER DATA AND ANALYSIS Requirements Planning Customer Demand Policy Initiatives or Imperatives PLANNING Recurring Requirements Unforeseen Requirements Prioritisation Aggregation Co-operation Collaboration Procurement Strategies Procurement Plans Market Intelligence C O N T R A C T I N G Frameworks Call Off Contracts Service Contracts Supply Contracts Contract Management Supplier Management Performance Management Contracts Administration ACQUISITION S U P P L Y Develop Specifications Supplier Landscape Procurement Strategy Supplier Capability
    • 16. The schematic below illustrates Kearney’s industry standard process flow of Strategic Sourcing
    • 17. World Class Commissioning Competencies and the Commissioning Process Overview WCC in Processes Access Needs Review Provision Prioritise Define Services Shape Supply Communicate Change Manage Performance
      • Plan
      • Manage knowledge and assess needs
      • Prioritise investments
      • Engage and Lead
      • Locally lead the NHS
      • Work with community partners
      • Engage with public and patients
      • Collaborate with clinicians
      • Procure
      • Stimulate the market
      • Promote improvement and innovation
      • Secure procurement skills
      • Manage
      • Manage providers
      • Make sound financial decisions
    • 18. The Good Practice Framework Contract Start up Procurement Initiation Policy Context Needs Assessment Procurement Route Specification Development Consultation Market Sounding Evaluation Plan Standard Contracts Tendering Provider Selection Contract Award Outcomes Current Service & Demand Contract Review Benchmarking Market Assessment & Stimulation Options Development & Resourcing Pricing Model Commissioning Plan and Business Case Performance Measurement Continuous Improvement Strategic Review Strategic Planning Acquisition Performance Management Stakeholder Engagement
    • 19. Where can CSUs add value? Skills and capabilities for assessment Clear vision & leadership Robust governance • Benchmarking • Cost base analysis • Coding practice • Process redesign • Admin & FM productivity & management • Performance management • Quality Account management • Service line management • Rostering & workforce strategy • Theatre planning and scheduling • Capacity planning and scheduling • Clinical engagement Productivity & performance improvement • Spend analysis • Procurement strategy, structure and skills • Sourcing and category management Supply chain management & strategy • Contract and supplier relationship management • Distribution and inventory management (departmental and cross - Trust) • Purchase - to - pay process improvement • Benefits realisation and tracking Market planning & strategy • Demand forecasting • Customer analysis (incl. commissioning strategy) • Competitor analysis • Private income strategy • Core strategic analysis (e.g. PEST) Change management & project management • Project management • Project planning & resource allocation • Stakeholder management • Patient involvement and experience strategy • Marketing & communication • Management information & reporting • Overall & service line governance