BACKBONE - Cost-cutting appears on menu for NHS

Supplying the UK's hospitals with food is big business, which hasrchef, its online ordering system. traditionally been carried out using paper-based ordering systems.

But Supply Direct, a Scottish catering company, has turned tradition on its head by throwing out paper-based ordering in favour of a custom-made extranet solution.

The new ordering system, Interchef, allows customers to log onto the Supply Direct website and use their customer ID and password to key in details of orders. These orders are not for individual items of food, but for the number of portions they need from a range of pre-agreed menus.

"Customers don't order steak pies or tins of beans," explained George Williamson, senior consultant at the Castle View Group, which owns Supply Direct. "They order the number of portions they need from their menu choices."

This doesn't mean hospitals have to order ready-made food; they can order the ingredients to make their own dishes, but they will still order against pre-agreed recipes.

Getting the right mix of ingredients

Whichever of these options they choose, customers' orders are passed from the website to a central NT server, which runs a relational database system based on Filemaker Pro. This is about to be upgraded to SQL Server, but the basic system works fine, said Williamson. From there, orders are generated automatically and go out via EDI (electronic data interchange) to Supply Direct's own suppliers, which include some of the UK's major food distributors.

Supply Direct's customers keep some food stock in the company's warehouses and the system keeps track of this, re-ordering when levels fall below agreed limits. All the necessary invoices and information relating to the orders are transmitted back from the suppliers to Supply Direct, providing what Williamson believes is an almost unique ability in his trade to keep track of the business.

"We insist our major suppliers transmit all documents back to us via EDI, so we're up to speed on the day of transmission," he said. "The information is posted into our general ledgers and reconciled automatically."

There have been many benefits for all involved in this streamlining of the whole supply chain, but one of the biggest advantages is the ability to check prices, according to Williamson.

"We have agreed contract prices with our suppliers and have discovered there can be substantial variations in pricing," he said. This may be, for instance, because a member of the sales staff will have agreed a price, but won't have notified all the outlets supplying the company. Whatever the reason, the ability to spot price differences on the day they occur and take action has saved the company a substantial amount of money.

Supply Direct's parent company, Castle View, is using the software developed by its subsidiary in its own business, supplying catering provisions to schools. In one instance, over a period of five weeks following the introduction of the new system, the company found that it had been overcharged by £27,500 by one supplier. Over the full school year, that could have been an overcharge of more than £200,000.

"Whether it is fraud or inefficiency, it doesn't matter," said Williamson.

"We can now spot it immediately and do something about it. We have reduced costs substantially."

There are still some smaller suppliers, such as milk producers, not able to use EDI. But on the customer side, the benefits of Supply Direct's extranet are catching on, even in a market not considered particularly computer-literate.

Williamson said the company provides dial-up connections where customers don't already have an internet link and provides training so that customers find the system easy to use.

Putting variety on the menu

In particular, the company spends a lot of time setting up the menu options for customers, which can be complex in institutions such as hospitals and nursing homes.

The company's Interchef system has to be set up with customer's menu choices and pricing constraints. The system allows them to key in the number of portions they need and see how much it will cost before sending the order, so they can adjust it if necessary. If they want to order specific individual items, they can use a separate system, also on the website, called Cater Shop. Orders placed before 10am will be delivered the next day.

At the moment, Supply Direct has eight NHS customers using its extranet and online ordering services. But Damian Bell, Supply Direct's MD, believes that number will grow, as more healthcare and public sector catering managers realise how efficient ordering over the internet can be.

Exploring the myth of hospital food

One of these customers is Northampton General Hospital, a 700-bed hospital with an urban catchment area of 300,000 people. It has been trialling the system for a year, and has decided to sign a three-year contract with the company to supply provisions for all patients and staff.

Charles Abolins, facilities director at the hospital, said the service he gets from Supply Direct is more flexible than the paper-based system the hospital had used previously.

"The service is geared to our catering operation and really is 'a one stop shop'. It reduces the time and paperwork we would incur if dealing with a number of different suppliers," he said.

That has cut costs dramatically. According to Bell it can cost £60 for the NHS to process a typical weekly catering order, but using the extranet system costs less than half that. "With us, it's just a matter of one order a week and one weekly invoice," he said. In the cash-strapped NHS, these kind of savings are much appreciated.