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ABSTRACT. This paper demonstrates, using empirical cases from the National Health Services (NHS), how existing practices in demand specification, procurement and supply management fail to address the significant problems caused by the misalignment of demand and supply. When examining internal demand management a number of problems arise including: product overspecification, premature establishment of design and specification, frequent changes in specification, poor demand information, fragmentation of spend, maverick buying, inter-departmental power and politics, and the risk-averse nature and culture of the organisation. It is argued that unless these problems are addressed and eliminated the NHS will not be in a position to select the most appropriate reactive or proactive approach from the range of sourcing options available. An improvement path that NHS Trusts might follow to achieve more efficient and effective procurement and supply management is outlined.
INTRODUCTION
Recent research funded by NHS Purchasing and Supply Agency (PASA) and supported by a consortium of NHS Trusts highlighted both the scope for potential entrepreneurial action and the many barriers to reactive and proactive supply management practices within the UK National Health Service. This article demonstrates, using empirical cases from the NHS Trusts, how existing practices in demand specification, procurement and supply management fail to address the significant problems caused by the misalignment of demand and supply, leading to an inability to recognise the subsequent potential for better reactive and proactive supply management.
The research has demonstrated that in the buyer-supplier relationship, suppliers to the NHS base their deals on the relative attractiveness (in terms of volume, regularity and salience) of the business. However, issues related to the management of internal demand such as product or service over-specification, premature establishment of design and specification, frequent changes in specification, poor demand information (a lack of basic demand management information and a robust way of controlling), fragmentation of spend, maverick buying, inter-departmental power and politics, and the risk-averse nature and culture of the organisation prevents the NHS from maximising the attractiveness of its business. The failure to overcome these 'barriers' inhibits the NHS from improving their current reactive supply management strategies and thereby reduces their ability to capitalise on their true market position and potential buying power. In addition, this failure also prevents the NHS from developing any form...