Supply Chain Inefficiencies in Healthcare and Why Data is the Solution

February 2022

One small abrasion to the supply chain link and the effects can be felt for years to come. A stark reminder of this came in 2021 when the Suez Canal blockade resulted in global losses of more than $9.6 billion a day.

When we think that the NHS spends approximately £27 billion every year on goods and services, and that recent announcements of additional NHS spend mean this figure will increase in the coming years, it’s clear why a lot of stakeholders are invested in ensuring the efficient operation of the healthcare supply chain.

International healthcare supply chain woes

Supply chain shortages and inefficiencies within the healthcare sector are by no means limited to the United Kingdom. It’s a global issue and as Douglas Hannah, writing in the Harvard Business Review, noted about the unpredictable state of the American system: “the pandemic demonstrated the devastating human and economic costs of this fragility: soaring prices and widespread shortages of critical medical supplies and personal protective equipment (PPE), and health care facilities struggling to protect staff and patients.”

Hannah goes on to reference the problematic nature of sourcing globally in a bid to keep costs to a minimum, particularly during events such as the pandemic, and why local producers truly came to the rescue when international supply chains ultimately collapsed. As Hannah commented: “They may never achieve the low costs of large overseas factories, but they do offer much needed strengths, including rapid response times and accessibility in times of crisis.”

Issues come to light within the NHS supply chain

The problems with the healthcare’s supply chain are by no means a new issue but, for many, the problems were only exacerbated by the events of COVID-19. Back in February 2016, Lord Carter produced a report detailing a need to improve operational efficiencies within the NHS, bettering their methods of choosing, using, and purchasing supplies, and eliminating “unwarranted variation in procurement across the NHS.”

After the Carter report, the decision was made by the Department of Health and Social Care to launch the Procurement Transition Programme that, over the course of the following five years, would go on to deliver £2.4bn of savings for the NHS through the provision of “clinically assured, high quality products.”

There is no denying that the future will require additional analysis of healthcare procurement and NHS tendering, taking learnings from failings recognised during the pandemic. However, there’s another elephant in the room that has not only highlighted but compounded issues – Brexit.

The NHS Confederation published a report in mid-January 2022 detailing what’s required from the UK Government to tackle the challenges of leaving the EU’s single market, setting out an eight-point plan that includes “long-term mutual recognition for UK and EU medical research” an “agreed mutual recognition of medical devices” and “a review of barriers to research” that would help support collaboration in world-leading innovation.

The report also calls for data sharing and cooperation between the UK & the EU, highlighting the importance of rapidly addressing cross-border health threats such as COVID-19.

Data is something we recognise as a playing a key role in the future of NHS procurement and is, in many respects, a crucial ingredient for a successful healthcare supply chain. If utilised correctly, data can transform the procurement process, eliminating efficiencies throughout. Here, we take a look at how healthcare, and more specifically the NHS, can introduce data-driven methodologies into their DNA.

Big supply chain analytics

First, it’s worth defining what big supply chain analytics is. McKinsey’s Big data and the supply chain report notes that: “big supply chain analytics use data and quantitative methods to improve decision making activities across the supply chain. It expands the dataset for analysis beyond the traditional internal data held and applies powerful statistical methods to both new and existing data sources.”

But why is this important?

Using supply data like that mentioned above, which is more complex than traditional spend analysis and supplier performance reviews, buyers can successfully find opportunities for predictive risk management, monitoring ongoing situations such as bankruptcies, natural disasters, and strikes, and taking decisive action early on.

Data driven decision making is undoubtedly one the standout reasons for implementing such an approach to healthcare procurement – it allows for the analysis of purchase orders, the trialling of new suppliers, and the monitoring of shipments. Data analytics allows buyers to benchmark performance and explore critical questions that would otherwise remain unanswered.

Due to the sheer size of the NHS, making decisions will often depend on the acquisition and, similarly, the accuracy of third-party data. By incorporating all possible data and aligning it, the most relevant, accurate information can be obtained, once again informing appropriate decision making.

Beyond internal decision-making regarding supply chain processes, transportation, warehousing, and manufacturing can all be improved by the implementation of appropriate, effective data capture and analysis.

That said, there must be an emphasis on improving how data is shared and corroborated throughout teams and those operating within procurement. Collaboration and shared understanding sit at the forefront of any successful supply chain – you need to communicate effectively with your suppliers, business partners, and your own employees to ensure the delivery of results.


Here, we’ve touched on just some of the reasons why the healthcare supply chain requires the use of data in years to come something which we envisage will only become more important as digital technologies ramp up. Book a demo today and open up a world of opportunity within healthcare tendering.