Measuring supplier performance

Howard Stokoe

NHS PASA7 June 2007

Outline

• overall aim

• work elements

• progress

• next steps

Overall aim

objective measurement of supplier and

supply chain performance:

• enable the NHS to manage its relationships with its suppliers for mutual benefit

• improve supply chain performance

Work elements – starting points

• Phil Aubrey questionnaire• PDIG award• supplier performance

• SCEP relationships and scoring against advertised award criteria

• evidence based award decisions• objective measurement of supplier

performance• NHS PASA/NPSG supply chain project

• tactical options to improve performance• develop and agree KPIs

What has happened – the chain of events

• KPIs developed and published• bid submitted to enhance pharmacy computer

systems• local focus• enhancements now available (trials pending)

• SCEP• methodology developed• measurement and reporting in place• PMSG – other supplier service aspects need to

be considered• Questionnaire

• PMSG agrees routine survey of hospitals• defined list of suppliers• questions based on Phil Aubrey’s work

KPIs being delivered soon

KPI JAC Ascribe

Line delivered on time, in full YES YES

Incorrect items received YES NO

Incorrect quantities received YES YES

% lines returned vs lines ordered YES NO

% invoices matched first time YES NO

Timeliness of payment YES NO

Line orders involving manual intervention of staff

YES NO

% orders involving manual intervention by pharmacy staff

NO YES

SCEP Relative Score Calculation

SCEP Definition Of Score

Score Definition

0 For information only

1 Short dated stock/emergency stock or limited purchases

2 Unable to supply , but solution offered

3 Unable to supply, but NO solution offered

SCEP Score Chart

SCEP Suppliers Ranked by Score

0

100

200

300

400

500

600

700

800

Suppliers

Questionnaire

• NHS PASA and PMSG undertook a programme of research amongst a small sample of NHS pharmacists to identify the extent to which contracted suppliers’ performance is meeting expectations

• On 10 January 2007, 21 pharmacists were invited to participate in the research consisting of an electronic questionnaire; 18 completed forms were returned for analysis by 21 February.

• The research was managed by an independent research agency, Exodus Research.

Areas of questioning

Which suppliers:• used by the trust in the last 12 months• paperwork has not met requirements• not have an adequate returns service• do not provide accurate invoices• do not charge accurately on contract prices• do not issue credits accurately or promptly• respond badly to off contract/clawback claims• do not always deliver on time and in full• have performed particularly well

Suppliers that have not always provided paperwork or where paperwork has not met requirements

suppliers that have not always provided paperwork or where paperwork has not met requirements

1

1

1

1

1

1

1

2

2

2

2

3

7

0 1 2 3 4 5 6 7 8

Supplier I

Supplier P

Supplier H

Supplier U

Supplier E

Supplier Q

Supplier C

Supplier V

Supplier J

Supplier O

Supplier T

Supplier M

Supplier A

number of respondents (base: 11)

• 11 of the 18 respondents felt one or more suppliers had not provided adequate paperwork

• 7 of the 17 respondents that used Supplier A indicated this supplier had not met requirements

• Key issues were unavailability of products with paperwork making no reference to these or being hard to tie up when delivered separately

Suppliers that have no returns service or one that is not easy to use

suppliers that have no returns service or one that is not easy to use

1

1

2

2

2

3

3

3

0 1 2 3

Supplier E

Supplier O

Supplier J

Supplier H

Supplier T

Supplier V

Supplier A

Supplier M

number of respondents (base: 8)

• 8 of the 18 respondents felt one or more suppliers had not provided an adequate return service

• 3 of the 17 respondents that used Suppliers A, M and/or V felt requirements had not been met

• Key issues include the time it takes to arrange collections and failure of companies to promote the service

Suppliers that have not provided accurate invoices or invoices that have caused problems

suppliers that have not always provided accurate invoices or invoices that have caused

problems

1

1

1

1

1

1

1

1

1

3

4

4

0 1 2 3 4

Supplier L

Supplier I

Supplier U

Supplier S

Supplier E

Supplier G

Supplier M

Supplier R

Supplier T

Supplier O

Supplier A

Supplier H

number of respondents (base: 9)

• 9 of the 18 respondents felt one or more suppliers had not provided accurate invoices

• 4 of the 17 respondents that had used Suppliers A and/or H felt requirements had not been met

• Key issues include receiving details of another organisation’s order and wrong prices being quoted

Suppliers that have not always charged accurately on contract prices

suppliers that have not always charged accurately on contract prices

1

1

1

1

1

1

1

2

2

2

3

4

0 1 2 3 4

Supplier L

Supplier U

Supplier S

Supplier Q

Supplier K

Supplier O

Supplier F

Supplier I

Supplier X

Supplier W

Supplier T

Supplier H

number of respondents (base: 11)

• 11 of the 18 respondents felt one or more suppliers had not charged accurately on contract prices

• 4 of the 17 respondents that had used Supplier H felt requirements had not been met

• Key issues include the wrong prices being quoted

Suppliers that have not always responded favourably with respect to off contract/clawback claims

• 11 of the 18 respondents felt one or more suppliers had not dealt with off contract / clawback claims to their satisfaction

• 6 of the 17 respondents that had used Supplier F felt requirements had not been met

• Some respondents indicated that claims had been disputed, even though the manufacturer was at fault

suppliers that have not always responded favourably with respect to off contract / clawback

claims

1

1

1

1

1

2

2

3

3

4

6

0 1 2 3 4 5 6 7

Supplier J

Supplier H

Supplier G

Supplier R

Supplie T

Supplier S

Supplier B

Supplier O

Supplier W

Supplier M

Supplier F

number of respondents (base: 11)

Suppliers that have not always delivered on time or in full

• 14 of the 18 respondents felt one or more suppliers had not delivered on time or in full

• 10 of the 17 respondents that had used Supplier M felt requirements had not been met

• A key issues is the unavailability of various product lines and the number of ‘to-follows’

suppliers that have not always delivered on time or in full

1

1

1

2

2

2

2

2

2

2

3

3

3

4

4

5

5

5

7

10

0 1 2 3 4 5 6 7 8 9 10

Supplier P

Supplier S

Supplier Q

Supplier V

Supplier L

Supplier I

Supplier D

Supplier Z

Supplier W

Supplier C

Supplier A

Supplier J

Supplier F

Supplier N

Supplier B

Supplier O

Supplier G

Supplier T

Supplier H

Supplier M

number of respondents (base: 14)

What next?

• KPIs• national aggregation of local system generated

KPIs• requires NPSG agreement• national capture (a la Pharmex)

• Questionnaire• some refinements – wholesalers – ecommerce• scope to capture all suppliers• twice yearly• base hospitals plus random

• SCEP• additional information

Acknowledgements

• supply chain project team lead by Sam Forrest

• KPI workstream – Kevan Wind

• Roger Miles – Pharmacy Business Technology Group

• system enhancement – Judie Finesilver

• SCEP measurement – Ian Allen (with Alison Greenwood and Rachel Willey)

• questionnaire development – Phil Aubrey

• translation into delivery – Allan Karr and PMSG

• formal survey - Exodus