The End of Centralised Procurement? What’s Next for NHS Supply Chains

For decades, the NHS has relied on a centralised procurement system to manage its supply chains, with NHS Supply Chain at the heart of this model. By pooling demand and negotiating at scale, the NHS secured bulk discounts, reduced duplication, and standardised product quality across trusts. But today, a question looms: does centralisation still meet the needs of a modern, value-driven, and resilient healthcare system?

Recent events, particularly the COVID-19 pandemic, exposed the fragility of an over-centralised approach. Disrupted international supply chains, PPE shortages, and a lack of local flexibility have prompted a rethink. The NHS is now moving towards a more dynamic, decentralised, and value-based procurement system—one that emphasises resilience, sustainability, and outcomes over cost alone. This evolution is also transforming the procurement process, integrating new technologies and strategies to streamline supplier engagement, approval workflows, and compliance.

This shift represents a fundamental change in the way suppliers and NHS trusts will engage in the future. Let’s explore what this means for the healthcare procurement and supply chain landscape.

Book your demo* today and discover how HCI can help you succeed in the next era of NHS procurement.*

Why the Centralized Procurement Model Dominated… and Why It’s Being Challenged

Historically, the centralised procurement system delivered measurable benefits:

• Cost savings through aggregated purchasing power, allowing NHS Supply Chain to negotiate bulk discounts that individual trusts could not achieve on their own. Increased purchasing volume through centralisation enables better negotiation with suppliers.
• Standardisation and compliance by managing supplier relationships nationally, ensuring consistent product quality and adherence to safety standards.
• Reduced administrative burden for local NHS trusts, freeing up the procurement team to focus on service delivery rather than repetitive tendering exercises.

However, centralisation has also shown weaknesses, particularly when tested under pressure:

• Fragility during crises: When global PPE supply collapsed, centralised procurement struggled to adapt quickly, leaving trusts exposed to shortages.
• One-size-fits-all limitations: Trusts faced challenges sourcing products tailored to local clinical needs, from specialist equipment to community-level solutions.
• Slow responsiveness: Local innovation and agility were constrained by central decision-making processes, sometimes delaying access to emerging technologies or new suppliers.

Decentralized procurement and decentralized purchasing, where individual departments or divisions manage their own buying activities, can offer more flexibility but often result in higher costs due to less efficient buying practices, duplicated efforts, and lack of economies of scale.

Case studies from the pandemic illustrate how some trusts that supplemented central supply with local sourcing arrangements—where each department and other departments handle their own purchases—were able to maintain continuity of care more effectively. In short, while centralisation brought efficiency, the NHS now recognises it must prioritise resilience, flexibility, diversity, and local adaptability in its procurement and supply chain systems.

The Rise of Decentralisation & Value-Based Procurement

The NHS Long Term Plan and recent reforms point to a new procurement era:

• Decentralisation through Integrated Care Systems (ICSs): Trusts and local commissioners now have greater autonomy to plan and purchase collaboratively, tailoring supply chain decisions to community needs.
• The Provider Selection Regime (PSR): Effective from 2024, the PSR enables commissioners to directly award contracts or run proportionate tenders, moving away from rigid EU-style tendering.
• Value-based procurement: From 2026, the NHS will roll out a framework to purchase medical devices and digital tools based on long-term value—improved patient outcomes and system efficiency—not just lowest cost.
• The role of NICE: NICE’s remit is expanding to assess devices, diagnostics, and digital products, ensuring investments focus on innovations with proven impact.

Procurement activities and procurement practices are evolving under these new frameworks, with a greater emphasis on collaboration, transparency, and strategic alignment across the NHS.

This marks a decisive shift away from cost-centric procurement. Internal policies must now be aligned with new procurement goals. Suppliers must now demonstrate how their solutions improve outcomes, support community care, and align with long-term NHS priorities, while also aligning with business priorities and delivering key benefits for the NHS. Sourcing strategies and a strategic approach are now essential for suppliers to succeed in this environment. Supplier selection and evaluating potential suppliers are central to the new frameworks, making procurement more efficient and driving better alignment with NHS goals and operational performance.

Book your demo* today and discover how HCI can help you succeed in the next era of NHS procurement by supporting informed buying decisions.*

How Sustainability, Ethics & Regulations Are Shaping Procurement

Procurement is no longer just about delivering products—it’s about delivering social value and ethical outcomes that extend beyond cost savings.

• Net Zero NHS: The NHS has committed to net-zero operations by 2040 and a net-zero supply chain by 2045. Contracts increasingly require Carbon Reduction Plans, detailed emissions reporting, and demonstrable decarbonisation strategies, making sustainability a prerequisite for doing business. Procurement requirements now also include the integration of sustainable practices and ethical sourcing to ensure environmental and social responsibility throughout the supply chain.
• Ethical standards: Compliance with the Modern Slavery Act and transparent labour practices are now critical. This includes auditing global supply chains for risks, publishing annual modern slavery statements, and evidencing fair pay and working conditions.
• Social value commitments: Procurement decisions increasingly weigh local employment opportunities, support for SMEs, and contributions to local community health and wellbeing alongside core contract delivery.
• Rising compliance thresholds: From ISO certifications to ESG reporting, suppliers face higher expectations. Even minor non-compliance can result in disqualification, as NHS procurement teams now require more rigorous due diligence and evidence of ongoing monitoring.

Real-world examples are already emerging: trusts awarding contracts only to suppliers with verifiable carbon reduction plans, or rejecting bids where modern slavery checks were inadequate. In this environment, suppliers who can demonstrate sustainability, social responsibility, and governance excellence—and prove these through data and case studies—will stand out and secure long-term NHS partnerships.

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Digital Transformation as the Backbone of the Future Supply Chain

Technology is becoming the connective tissue of the NHS supply chain:

• Atamis eCommercial System: A single NHS-wide procurement platform offering end-to-end tendering, contract, and supplier management. This streamlines previously fragmented procurement processes into a unified digital hub.
• Scan4Safety: GS1 barcode standards enable real-time tracking of supplies, improving patient safety and stock visibility. During the pandemic, trusts using Scan4Safety could better manage scarce PPE stock and ensure rapid redistribution to areas of greatest need.
• Digital procurement playbooks: New NHS digital frameworks promote transparency, analytics, and shared best practices across trusts, allowing more consistent approaches to tender evaluation and contract delivery.
• Integrated logistics platforms: Emerging technologies now allow trusts to track shipments, predict demand, and reduce wastage, improving resilience in periods of disruption.

For suppliers, digital transformation means:

• One central portal to access NHS contract opportunities with clearer navigation and automated alerts.
• Greater visibility of procurement pipelines and requirements, helping suppliers plan production and compliance more effectively.
• Opportunities to align bids with sustainability scoring, carbon reporting, and clinical value measures, all increasingly embedded within digital tender platforms that leverage artificial intelligence for analytics and compliance.

HCI plays a pivotal role here, providing suppliers with award data, spend analysis, and real-time tender alerts, helping them navigate this increasingly digital marketplace with confidence.

Book your demo today* and discover how HCI can help you succeed in the next era of NHS procurement.*

What This Means for Suppliers and NHS Trusts

Both suppliers and NHS procurement teams must adapt to a hybrid procurement landscape that blends national frameworks with locally tailored strategies. In this context, adopting a unified approach is essential for both suppliers and trusts to ensure coordinated risk management, supply chain visibility, and alignment with sustainability goals.

Many companies are now moving toward a single team approach, where a centralized department manages all purchases to improve efficiency and control. This centralized management allows for better control over procurement activities and helps identify cost saving opportunities through regular process reviews and strategic analysis. It is also vital to focus on negotiating contracts to secure favorable terms and to safeguard sensitive data throughout the procurement process.

This means learning to balance efficiency and standardisation with flexibility and resilience, while ensuring the company’s procurement strategy is aligned with the new landscape. Understanding the role of raw materials and key components in the supply chain is fundamental to developing an effective procurement strategy that supports product quality and regulatory compliance.

Overseeing all purchases is crucial to maintain compliance and optimize operational efficiency. Achieving procurement excellence requires continuous improvement and strategic development, and suppliers can offer insights that help NHS trusts drive innovation, process improvements, and cost savings.

For Suppliers

• Diversify strategies: Engage not only with national frameworks but also with ICS-level and trust-specific opportunities, ensuring visibility across the full spectrum of procurement.
• Demonstrate value: Showcase how products and services deliver measurable improvements in patient outcomes, reduce system-wide costs, and contribute to sustainability objectives.
• Ensure compliance: Maintain readiness with certifications, ESG reports, Modern Slavery Statements, and carbon reduction plans to meet rising NHS standards.
• Invest in digital readiness: Adopt tools that allow seamless integration with NHS digital platforms such as Atamis and Scan4Safety.

For NHS Trusts

• Balance autonomy with alignment: Exercise local decision-making authority while maintaining consistency with national frameworks and standards.
• Leverage data-driven insights: Use analytics to understand supplier performance, identify best-value options, and integrate innovation responsibly.
• Strengthen resilience: Develop contingency plans for supply disruption, drawing on both local networks and national procurement systems.

HCI’s platform supports suppliers by mapping procurement trends, tracking tender opportunities, analysing award data, and supplier engagement.

 

Actionable Next Steps for Stakeholders

To thrive in the post-centralisation era:

1. Align with NHS Net Zero Roadmap: Build sustainability into every stage of your supply chain.
2. Meet ethical standards: Publish a clear Modern Slavery Statement and vet your suppliers rigorously.
3. Adopt a multi-level strategy: Target both local contracts and national frameworks.
4. Use data-driven tools: Harness platforms like HCI to track procurement cycles, monitor award data, and anticipate trends.
5. Engage early: Build relationships with ICSs and NHS procurement leads before tenders are released.
6. Demonstrate added value: Highlight not only cost efficiency but also social, ethical, and environmental impact.

Book a free demo to see how HCI’s tools map evolving NHS procurement and supply chain trends.

 Final Thoughts

The NHS is transitioning from a centralised procurement model to one that is decentralised, value-driven, sustainable, and digitally enabled. While centralisation brought efficiency, the future lies in a supply chain that balances scale with resilience, and cost with value.

For suppliers, this is both a challenge and an opportunity. Those who adapt—by embracing sustainability, digital tools, and value-based outcomes—will not only win contracts but also help shape a stronger, more resilient NHS.

 Book your demo today and discover how HCI can help you succeed in the next era of NHS procurement.