I was drawn to a report on the BBC yesterday, which highlighted to me the risk of looking for complexity and innovation at the expense of good old fashioned simplicity and good business practice. It’s very easy to get excited about how technology innovations and advances, such as the Internet of Things (IoT), will positively impact the management and performance of the supply chain, but this BBC report brought home the need to first address the fundamentals before looking for the next opportunities.
The report was discussing the age old topic of inefficiencies within the National Health Service (NHS), and the opportunities to save money and deliver a more efficient and customer focused service. I went on to read the BBC article, which was based on a report from Lord Carter. The report concluded that the NHS in England could save £5bn a year with improved staff organization and a better approach to purchasing. The savings weren’t just from procurement and supply chain efficiencies, there were several other areas, but there seemed to be a consistency in the potential cause of many of the issues – visibility and effective collaboration.
The report described huge inefficiencies in the way staff were managed, with one hospital losing £10,000 a month through workers claiming too much leave and how better use of medicines could also have a substantial impact. For example, Lord Carter found one hospital had managed to save £40,000 a year by using non-soluble versions of a tablet for liver failure that cost 2p instead of the soluble versions at £1.50. In fact, significant savings could also be made on everyday items such as syringes and aprons with prices varying by as much as a third. Apparently, The NHS uses 500,000 different lines of everyday items with the price between similar goods varying by over 35% compared to 1 – 2% in other health systems.
These issues are not the result of wrestling with new and challenging concepts like IoT, they are the result of equally challenging concepts like giving decision-makers access to all the data and information that they need to make better decisions. The BBC interviewed a procurement professional who rightly pointed out that you can’t just compare the price of an item as the quality, availability and associated services could well be different. Decision makers need to see information “in the round,” which can presents challenges when one considers the variety and inconsistency of the data.
Of course, it’s not just the data. In my experience the challenge is often more about how effective and well-intentioned the collaborative processes are that underpin business relationships and decision-making. Typically, trading partners are fighting over a share of the value chain so relationships can often be adversarial in nature, with limited real collaboration. It’s only when collaboration can be seen to grow value and as a consequence participants share, that it becomes truly compelling. Data and the insights it provides is one of the adhesives for effective collaboration, and it needs to be shared and made available in ways that support business processes and decision making paths. It also needs to give participants appropriate flexibility to add their own perspectives and dimensions.
I am genuinely excited about what IoT has to offer in the supply chain, but will always want to ensure that we have adequately covered some of the basics in parallel. People will always point to the fact that finding savings in NHS spending is nothing new. I agree it isn’t, but as I hope I have illustrated – new is not always the only consideration.
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