16 November 2009 | Jake Kanter
The UK's largest private health firm, General Healthcare Group (GHG), is redefining the role of buyers as part of a procurement shake-up.
Under GHG's three-year purchasing transformation programme, which began in 2008, individual buyers have been taken on to lead efficiency projects in areas including catering, facilities management and hospital decontamination. And some of these projects are designed to make as well as save money.
In addition, instead of hiring category experts, Matt Oxley, group procurement and property director, has recruited theatre managers and hospital operations staff to go into the business to 'sell' new deals.
Oxley said purchasers have taken on responsibility outside the traditional procurement remit, using project management skills to redesign processes and generate revenue.
The work is helping the firm offset falling demand for private healthcare - including cosmetic surgery - in the economic downturn.
On catering alone, procurement has this year delivered savings of £1 million on spend of £15 million after standardising the hospital menu, cutting labour costs and lowering food prices. It has also set up five new coffee shops across GHG hospitals, earning the company £200,000 a year.
Oxley told SM: "We reviewed how we're going to deliver our service, in terms of procurement and supply chain, but also in doing that we saw opportunities to improve the operating efficiency in other areas, not through better buying, but through better management."
As part of one programme, the department is overseeing the acquisition and sale of a decontamination business, which is expected to make the firm a "substantial profit".
The procurement department is now comprised of its group of buying experts and the "implementation team" who sell deals to the business.
The buyers have been recruited from retail and FMCG backgrounds and are responsible for securing good value products at a low cost; while Oxley said the sales team is adept at overcoming internal resistance.
Procurement alone has saved GHG £9 million this year and the department is targeting a further £9 million in cost reductions in 2010.
"We need to ensure we are driving our financial performance and cost management so we can maintain our top position, but also take advantage of some of the casualties in the area."