Strength based on insight into suppliers' motivation

28 November 2002
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28 November 2002 | David Arminas

NHS purchasers have been urged to operate from a position of strength so they can get the best deals for their trusts.

Chris Lonsdale, lecturer in supply chain management at the Centre for Business Strategy and Procurement at the Birmingham Business School, told delegates at this year's annual Healthcare Supplies Association conference that strength comes from understanding suppliers' motivation.

"They know that since so much will change during contract time, there will be a lot of time to make up money not in the original deal."

Lonsdale said buyers should have all relevant information, such as accepted supplier margins and market conditions, to make long-term deals.

But he denied that he was advocating a return to aggressive behaviour by buyers.

"Be careful the talk of partnership does not catch you off guard," he said. "Buyers and suppliers need to collaborate, but the experience in the public sector, certainly with large-scale projects, is that buyers have been trying to collaborate from a position of weakness, or they have been locked into long-term relationships."

Nick Epps, managing director of wholesaler Hospital Management and Supplies, a Unichem company for warehousing and distribution, agreed.

"You pitch the competitive tender to win that business and secure that market, and if anything does change, I have the ability to put in a change and then charge more," he said.

Both client and supplier should have as much information as possible for long-term deals, he added. But some things are unforeseeable, such as London mayor Ken Livingstone's forthcoming tax on vehicles entering the city centre.

Lynne Horn, head of procurement at Argyll and Clyde Acute Hospitals NHS Trust, said it can be a challenge to get information.

"Often purchasers are not aware of how much money they are spending and who they are spending it with," she said.

This is being tackled in Scotland, where Scottish Healthcare Suppliers - the equivalent of the NHS Purchasing and Supply Agency - and Audit Scotland are developing supplier performance measures and documenting where money is spent.

"But as yet we haven't been very good at going into discussions with suppliers on a collective or consortium basis," Horn said.


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