The Problem · Taking Action · Managing Processes · Contact

A recent case study carried out by the NHS Purchasing and Supply Agency illustrates some of the benefits of procurement cards. This article is reproduced with the kind permission of the Agency and South Durham Health Care NHS Trust.

Introducing purchasing cards at South Durham Health Care NHS Trust has reduced the amount of time spent processing invoices for just one department for a full day every month to just 45 minutes. This case study looks at the background to the project, the processes the trust went through that the full range of benefits that the trust and its suppliers are now experiencing.

Earlier this year, South Durham Health Care NHS Trust became the first to use purchasing cards to conduct transactions for orthotic products (e.g. orthopaedic footwear) purchased by its appliance department. The trust's objective was to reduce the paper process associated with the ordering and payment of orthoses.

The Problem   [top]

South Durham Health Care NHS Trust spends £400,000 every year on orthoses - 1.3% of its total £31m non-pay expenditure. Out of a total of 56,000 invoices, 4,200 are processed for orthoses in a single year (1999/2000 figures). This means that 7.5% of the trust's total annual invoice value is made up of invoices for this one product area, showing a clear imbalance of process resources directed towards a small proportion of expenditure.

The trust's main supplier of orthoses is Peacocks, which also provides the trust's orthotist.

Taking Action   [top]

Have identified the invoicing for orthoses as a problem area, the trust approached Peacocks to discuss the introduction of purchasing cards. The company was aware of the cards due to seminars run by the NHS Purchasing and Supply Agency (previously NHS Supplies), but had not, as yet, received a direct request from a customer to trade in this way. With the help of the NatWest Streamline Supplier Acquisition team (NatWest is the card provider under the NHS Purchasing and Supply Agency scheme), the suppliers gained the capability to receive card transactions to full line-item detail, allowing it to dispose with paper invoices.

The trust's appliance department conducted a review of its procedures to maximise the benefits that the new purchasing card system could make. Sylvia Slaughter, project manager in the department, commented: "The functionality of the card has allowed us to look again at what we do, maintaining and developing the good things whilst changing processes that were not so valuable. By encouraging ownership and managing work flow we have improved the workplace environment, allowing us all to concentrate more on patient-facing areas."

Managing Processes   [top]

Following the issue of a purchasing card from NatWest the card number was given to the suppliers. All purchases were thereafter linked in that one card number. The Hospital Information Support System (HISS) is in use within the department in order to maintain the patient record. The demand is stimulated from the AOF (appliance order form) and input to HISS. One copy order is printed and taken by the orthotist to the suppliers on his or her return to the office. The orthoses are either supplied stock or manufactured, but transactions are processed only when the goods are ready for shipment, when they are delivered to the trust. The delivery note is then matched up with the original order.

At the end of the month, when the bank issues its statement, an Excel file containing details of all transactions is emailed to the finance department and to the appliance department. This allows all transactions to be easily and quickly checked and statement paid. Where, previously, each orthosis supplied had stimulated an individual invoice that had to be matched and paid, the use of the purchasing card functionality means that only one payment is made, and the checking is simplified due to the statement being applied electronically.

The trust's management accountant, Simon Gregory, has seen huge savings in time and resources. Invoice matching for the appliance department alone took one day per month under the old system. Using the purchasing card system, it is envisaged that this will be dramatically reduced to 45 minutes.

Peacocks has also acknowledged process management improvements, along with a faster payment cycle. As more of the supplier's customers migrate to this system, it will have to invest in software enhancements, but the company's finance director, Alan Hansell, already recognises the benefits that purchasing cards have brought to its relationship with South Durham Health Care NHS Trust.

All organisations involved in this business process change speak positively about the improvements that have been brought about by using cards to replace time-consuming and non-value-adding activities. South Durham Health Care NHS Trust is seeking to extend its use of purchasing cards into other areas whilst the supplier expects other customers to want to utilise purchasing cards to conduct their transactions.

If you would like further information on how the use of purchasing cards could benefit your trust, please contact:

Mark MacIntyre,   [top]
Purchasing Executive - E-Commerce,
NHS Purchasing and Supply Agency
tel: 07721 879599

email: mark.mcintyre@doh.gsi.gov.uks

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