The UK government has stated its aim to realise £1.5bn of procurement efficiencies across the NHS by the end of 2016.
To help achieve these substantial savings the government has mandated that NHS trusts move to an EU prescribed standardised means of exchanging electronic documents for the procure-to-pay process using PEPPOL (Pan-European Public Procurement Online). GS1 labelling standards have also been mandated.
So what will this mean for suppliers?
For many suppliers to NHS trusts, especially small businesses, this may sound like a headache heading their way. What will it mean in terms of new technology, existing systems and working processes? Will it be a cost to doing business? And what exactly will be required in order to comply?
Interestingly, far from being a constraint or hindrance, businesses supplying the NHS have the opportunity to make significant operational, administrative and financial gains from embracing PEPPOL – indeed, early adopters will be in prime position to take advantage of this gateway to a wider EU market as it opens up.
Here are five key points to consider:
1. What is PEPPOL?
PEPPOL is an electronic data interchange protocol co-funded by the European Commission and 18 government agencies to simplify the purchase-to-pay process between government bodies and suppliers. In simple terms what it offers is a standardised connection for electronic ordering, e-invoicing, electronic credit notes, and advanced shipping notifications (ASNs).
2. Why is it important?
For NHS trusts this standardised approach to e-procurement, combined with the adoption of GS1 barcoding standards, paves the way for the modernisation of material planning and material flow processes within the trusts - helping to reduce errors and cut burdensome administration by automating tasks. PEPPOL and GS1 standards together, will simplify inventory management and improve traceability – removing waste and cost – and will free medical staff from onerous stock-keeping duties, allowing them to devote more time to patient care.
At present, average costs associated with processing a single order through to invoice at an NHS trust is £7. Pilots being conducted by Data Interchange are expected to demonstrate that that cost can be reduced to less than £1 – quite a saving for the average trust processing some 80,000 invoices per year.
3. What are the benefits for suppliers?
Through PEPPOL suppliers will have a single purchase-to-payment process acceptable to every NHS trust – so reducing the time, complexity and cost of complying with the many varied requirements of individual trusts. Likewise, PEPPOL can also be used to streamline processes within a supplier’s own supply chain, down through multiple tiers, creating greater visibility for the control of inventory and working capital. There are also significant competitive advantages to having a ‘best practice’ solution.
But perhaps one of the biggest benefits for a supplier will be in improving cash flow. Automation and checks along every step of the purchase-to-payment process eliminates errors and removes inconsistencies between purchase orders, ASNs, delivery notes and invoices, removing barriers to fast reconciliation of invoices and speedier payments.
Then there are the considerable benefits of having early access to a burgeoning European market, as further EU states mandate the use of PEPPOL as a common standard for doing business with government organisations.
4. Will it impact existing technology investments?
No, is the simple answer. There is no requirement to change existing technology as suppliers can simply access the PEPPOL network via a certified service provider. In fact, as all NHS trusts are required to standardise on PEPPOL, suppliers will no longer have to use multiple EDI solutions to comply with the variety of standards currently used. And by having just one simplified procurement-to-pay process available through a single service provider, significant savings can be made on systems, fees and administration.
Importantly, the access point provider, not the supplier, facilitates interoperability between systems.
5. What’s needed to access PEPPOL?
All a supplier needs do is connect to the PEPPOL network via a certified PEPPOL access point. A supplier is then free to communicate with any trading partner connected to the PEPPOL network, regardless of the access point used. Importantly, PEPPOL does not replace systems already in use by businesses and organisations - it simply connects them.
As one of the first UK-based certified PEPPOL access points, Data Interchange is currently working with a number of NHS trusts to pilot, test and establish access to the PEPPOL network, integrating both large organisations and providing solutions for the smallest suppliers alike – including the provision of GS1 compliant labelling and scanning systems.
The UK government has set out a ‘best practice’ framework for e-procurement in the NHS – with further government entities to follow. Suppliers now have the opportunity to tap into that resource to speed-up cash flow, reduce errors, cut administrative costs, drive supply chain efficiencies and reap the rewards of new markets. The opportunity is there for the taking.
☛ David Eyes is head of business development at B2B integration solutions provider Data Interchange