What are the biggest challenges you face as a supplier today when looking to expand your business relationship with government behemoths such as United Kingdom healthcare organisations? What recommendations does procurement have for suppliers like you and how can technology help to improve processes and meet your goals?
Those were some of the questions posed at our supplier community event in London on March 29th, 2017. During the evening, a group of suppliers to the National Health Service (NHS) turned up to learn from a panel of thought leaders. Our goal for the evening was to help uncover barriers and discover opportunities between buyers and suppliers within UK healthcare.
Simon Murphy, a director at Asensys consultancy and a former director of finance and accounting at NHS SBS, moderated the panel discussion. To represent the buyer’s perspective we had invited Louise Stallard, a senior procurement consultant working for Southern Health NHS Foundation Trust. Barrie Fricker, CEO of The Redshank Group participated with the supplier’s perspective. The Redshank Group has years of experience selling into different NHS trusts. Jon Vass, account executive at Tradeshift and thought leader within the future of procurement and finance, also joined the panel.
We looked to uncover the inner workings of demand establishment and supplier selection. Becoming a supplier to the NHS can be hard, especially as a small or medium-sized enterprise (SME). How do you compete with the larger companies, how do you get invited to the table and how do you make sure you stay there?
As a procurement consultant, Louise Stallard summarized the challenge commonly faced by SMEs. As an SME, you are most likely engaged with localised procurement. For example, as a smaller supplier you have a contact within an NHS organisation and you will be able to sell to the organisation without too much restriction. But then as the spend grows, restrictions start to take effect. If you are a supplier that has a high volume of small transactions with an NHS trust, there is a risk that you will become detached later, because the spend will grow too big. In this case, the NHS will go out to tender and you might be left out of the equation. This is because NHS procurement operates with various spend limits that need to be considered to ensure compliance. For example if contracts exceed £150k they will most likely fall under the OJEU publication, in which all tenders from the public sector valued above a certain financial threshold must be published. As a supplier, you need to be very aware of anything that you are selling that goes above the contracted spend. As a procurement department you need to monitor that cost and engage with the suppliers to avoid losing strong and efficient business connections.
One of the highest priorities for suppliers who want to grow their business with the NHS is to research current market trends pertaining to the NHS. As Louise explains, everything that the NHS does has to be open and transparent. There is a terrific wealth of information available publicly, it just requires time and effort to unearth it.
Louise advises engaging with the various hubs available such as Commercial Solutions, North West Procurement, North East Procurement, London Procurement Partnership and East of England Collaborative. NHS organisations tend to purchase in groups or in collaborative networks. It is imperative to find an entry point into these collaboration. As soon as you gain access to those hubs you will be able to tick the categories that you serve and you will then receive alerts when relevant opportunities appear.
But simply relying on alerts is not safe. As a supplier, you need to be proactive and contact buyers directly. A strong recommendation from both Louise Stallard and Barrie Fricker is to get on a framework contract with the buying organisation. From Barrie’s perspective, trading with the NHS becomes significantly easier once you are on a framework. With that said, getting onto a framework is not easy. It takes time, persistence, and research. The hard work will pay off though. Once you are in, you will reap the benefits. But where do you start? How do you engage with the NHS to begin with, not being on a framework?
The Redshank Group is still working towards a framework. What they have done in the meantime is partner with other, larger companies already on a framework. And as a smaller company, The Redshank Group had certain specialities to offer that the larger companies did not. In that way the partnership allowed both parties to grow. Collaborating with competition might seem counterintuitive, but for The Redshank Group, Fricker explained, this was an effective door opener. Not only did they expand their business, they also gained valuable insight about selling into the NHS – knowledge that helped them move forward and expand further.
In addition, Fricker recommends case studies as an opportunity for suppliers to get through to the procurement departments: “Highlight how much your company has saved the NHS over the years and how you have helped the buyers get exactly the products and services they were after. Engage with the procurement teams, ask your connections within NHS procurement to share your story broadly, ask the team to come meet you. It is all about communication and about being progressive”.
And as Stallard points out, one of the forces you have as an SME is your agility – as a smaller company, you are more likely to go out of your way to help customers. Responsiveness, in addition to innovation, is an added value for buyers using SMEs.
As an SME you rely on cash flow, but getting paid on time can be tricky. From Fricker’s experience this is unfortunately the case within some trusts. However, as Tradeshift’s Jon Vass points out, the trusts do not actually want to pay the suppliers late. It is the processes set in place that appear to be the problem.
The main barriers in on-time payment are a lack of communication and poor data. Fricker explains, and many guests in the room agree, that chasing payments typically happens over the phone, although it is quite difficult to find the right person to talk to about invoice status. And from the buyers perspective, lacking information on invoices such as PO numbers and person references can slow down the payment process significantly.
A supplier among the guests spoke up: “We are invoicing through Tradeshift now and not only is it free to use for suppliers, it has significantly improved the time it takes to get paid.”
Trusts who have used Tradeshift are able to receive invoices electronically through the platform. As a supplier, the platform is free to use, and you can submit an invoice either via the online portal or by integrating to your accounting system. If you have a buyer who receives invoices through Tradeshift there is essentially no processing – the document firewall on the platform ensures that invoices cannot be sent unless they are correctly formatted, which expedites the payment process. This innovation can decrease payment time from 90 days down to a week.
Communication and collaboration between buyers and suppliers must be prioritised and improved. In the business-to-consumer world we use new, user-friendly technologies to collaborate between buyer and seller every day without even thinking about it. Why should it be any different in the business-to-business world?
We want to remove the friction that exists between supplier and buyer and also between people within the same organisation. Imagine the simplicity of a system that ties collaboration to your business transactions, from quote to PO to invoice to payment. Currently, when a supplier eventually gets through to talk to the right person in Accounts Payable, that person might not have the invoice or the quote in front of them. And the process is again drawn out. Imagine how that could change by bringing business processes, documents and real time collaboration together on one platform.
As a supplier, the Tradeshift Marketplace lets you upload products and services for buyers to sift through. What’s more – buyers and suppliers can easily communicate, share information and handle payments – all in one place. As an SME, it’s easy to feel overwhelmed by approaching a large organization such as the NHS. Here, you can be recognized alongside larger suppliers. By democratizing this process, we’ve made it simpler for suppliers to enter into an organization like the National Health Service.
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