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Inflationary Increases and Supplier Resilience

By September 2, 2022No Comments

Over recent weeks there has been dialogue between BIVDA and NHS Supply Chain relating to 2 issues that are a high priority for both NHS Customers in the labs, NHS Supply Chain and members. Inflationary pressures and Supply Chain resilience.

It may be useful for members to know that NHS Procurement teams are expected to evaluate and understand the percentage increases for each component part of the products that price increases are being requested for.

There are systems in use across the NHS to track raw material, shipping and labour costs indices and there is an expectation on suppliers to provide a detailed breakdown of the cost increases they face.

The NHS will then reverse engineer and determine a reasonable and quantifiable increase. BIVDA has asked that the methodologies are shared so that suppliers and the NHS can work together to avoid un-necessary delay or negotiations to reach an acceptable value. We will keep members updated on how those discussions progress.

Their process will require a price increase request form with all the relevant information, and sometimes if significant, suppliers can expect that the request will go up to the Executive Board of the organisation.

Processes will differ slightly depending on the contracting authority and the size of the contract, but the general process, and the guidance from the centre still requires the same information.

The approach by the NHS as a whole does align with the position paper published by BIVDA, and I would be grateful if members could feedback if and how they are managing to apply justified price increases and if there are any particularly difficult or simpler negotiations they are going through. The NHS does want to do the right thing to ensure continuity of supply to the NHS, and this will invariably include accepting increased costs if they must be applied.

The second major issue facing the NHS currently is stock shortages and delays. All members are aware how difficult it is for a pathway or analytical process to change in the laboratory quickly, and therefore advance notice of problems (even if only potential) is notified to the end user, the primary contractor if via a managed service and equally as importantly, NHS Supply Chain, or the Supplier Resilience Team at the DHSC.

While any supply disruptions should be reported through the usual routes. The National Supply Disruption Response (NSDR) remains a 24-7 call centre for supply disruption. The NSDR remains operational and available to help support instances of critical supply disruption where no other mitigations are available and patient care is at risk.

National Supply Disruption Response Service

It is usually the contractual obligation of sub-contractors to notify primaries and for primaries to notify the customers. It is also the responsibility of primaries to ensure an alternate supply of equivalent performance.

The Trust/ End user should have some sort of business continuity in place, whether that it an alternative validated product, or send away or methodology, but it should never get to the stage of no stock.

Where supply chains are delicate – suppliers could pro-actively adjust contracts in partnership to have stock on site, or a back up available to buy within the contract. There are mechanisms in the managed service contracts and the direct supply contracts that have compensation and reimbursement, but if the process can be looked at and mitigations put in place.

Please could we ask you to notify helen@bivda.org.uk if you do have any supply concerns or materials requirements and we can assist in communication or any other support you may need.

 

Ben Kemp

About Ben Kemp