NHS seeks the Amazon appeal with Virtualstock expansion

Sheffield Teaching Hospitals NHS Foundation Trust has implemented Virtualstock’s digital procurement platform, which aims to bring Amazon-like simplicity to the NHS’s supply chain.

Called the Edge, Virtualstock’s solution is an end-to-end ‘PIM2Pay’ product catalogue comprising everything from product information management (PIM) to payment via electronic invoice.

Six of the top 12 online UK retailers, including Sainsbury’s, Argos, Tesco and John Lewis, use Virtualstock’s internal marketplace. The platform used within the NHS is a repurposed version of The Edge, appropriately named The Edge for Health.

Described as similar to Amazon, the technology hosts a marketplace of products and services for the NHS, ranging from everyday commodities to medical equipment, computer systems and cleaning contracts.

The Edge has been designed to meet retail and GS1 e-commerce standards and was adopted into the NHS as part of Lord Carter’s ambitions to save the NHS £22bn from its procurement and purchasing by 2020.

Guy’s and St Thomas’ is Virtualstock’s longest-standing NHS client, which has been using its digital marketplace since November 2015.

Sheffield Teaching Hospitals is the latest trust in the Shelford Group to sign up to the platform. Andrea Smith, the trust’s director of procurement, said: “With the NHS procurement landscape changing significantly, we needed to implement a truly innovative solution and Virtualstock was the obvious choice.

“We are currently working with our suppliers to ensure the product catalogue is enriched and price files authorised. That process will inevitably lead to more accurate orders and less invoice queries. It is also a great way for us to see the vast product ranges that historically we did not have room to store on our legacy system.”

The Shelford Group, a collection of trusts comprised of leading multi-specialty healthcare organisations, is in the middle of its roll-out programme with Virtualstock. The UK-based software as a service (SaaS) company also has a strategic partnership in place with NHS Shared Business Services.

Speaking to Digital Health News, Rob Knott, director of healthcare and public sector at Virtualstock, said the platform plugged a long-standing hole in the way the NHS ordered goods and services – namely, by bridging the flow of data from a supplier’s catalogue to a hospital’s inventory. “Procurement and supply chain management has been dramatically underfunded for many years,” said Knott.

“The Department of Health has never designed and developed a world-class model to support hospitals. Hospitals have never recognised the importance and significance of owning a world-class supply chain function and therefore, have never invested in one.”

The majority of the NHS still orders much of its products through legacy systems like Oracle, which lacks product images and contains little in the way of product information. “It’s a hideously static environment,” explained Knott.

According to Virtualstock, Tesco has managed to shave its waste down to around one percent through its use of The Edge. The NHS has since acknowledged the supermarket giant’s success story and been working with Virtualstock to assess how its technology can be used for its own purposes.

The Amazon effect

“There’s levels of sophistication in retail, a massive focus that’s been around data accuracy on products,” explained Knott. “I started to think, rather than replicating this technology, why not lift it and shift it from retail into healthcare?”

Additionally, Knott said a lack of transparency in the NHS’s procurement process made it difficult to keep track of what had been ordered, when and by whom. “There are so many products that go into obsolescence or go to waste because they’re bought in massive quantities and stockpiled in hospitals and forgotten about.

“Imagine in a big teaching hospital where there are 3,000 or so people requisitioning something every day. Before they order something, they have to go through several tiers of authority.

“There is an alignment to the consumerism of the purchasing life-cycle that our platform seeks to maintain in healthcare. But it’s also configured so that if there are any products that need to be authorised before it gets ordered, it can go through the workflow with complete transparency and visibility.”

According to Knott, in one UK hospital in 2012, £800,000 of expired products were found across wards. This included around £40,000 of orthodontics products that had been purchased seven years beforehand.

“Some of the most advanced hospitals – which at least have systems to track waste – believe that around 10-12% of what they purchase goes to waste. Interestingly, the Department of Health identified that hospitals were purchasing drugs twice per day, yet they had several weeks’ worth of stock of the same drugs on the hospital shelves.”

The consumerism of procurement – something Knott refers to as “the Amazon effect” – suggests that organisations are eager simplify their procurement processes by adopting new technologies into their supply chains. For the NHS, this could mean knocking a considerable sum off its waste bill and delivering measurable cost-savings as a result.

But in achieving Lord Carter’s targeted £5bn per year between now and 2020, Knott suggested The Edge was just part of the jigsaw. “It’s an enabler. We can only configure the technology to support what a trust ultimately wants to do.”