The next wave of NHS savings will come from controlling what has already been bought, not just negotiating what gets bought next
In our previous article, we argued that one of the biggest opportunities for the NHS to make savings lies in everyday decisions about products, suppliers, service models, contract performance and clinical variation. Greater visibility over inventory is the most practical way to unlock significant savings over time.
Previous article
For many NHS Trusts, inventory visibility and control is one of the most under-utilised non-pay spend value levers they can pull. While price and contract discipline remain essential, they do not fully address the pressure caused by stock that has already been bought, distributed, stored and, in some cases, forgotten.
Across theatres, wards, stores, procedure rooms, pharmacy areas, community services and specialist departments, a reliable supply of stock is essential to the delivery of high-quality care. The issue is not whether Trusts should hold stock, but whether they have enough visibility to hold the right stock, in the right place.
The answer is to create a Trust-wide inventory control model that combines baseline data, clinically segmented stock policies, digital tracking, demand-based replenishment, and a clear ownership structure. Leading healthcare providers globally already treat inventory as an operational control discipline. With the right vision and technical support, every NHS provider can move in this direction.
For CFOs, this is not only an opportunity to make an operational improvement but to boost financial resilience and productivity. A Trust with ~£300M annual non-pay spend could have approximately ~£6-15M tied up in stock if inventory represents 2% to 5% of that spend, based on Bain/Proxima experience. Reducing inventory from 5% to 3% through better demand planning and the removal of dead stock could release around £6 million of working capital, without compromising the quality of patient care.
For clinical and operational leaders, however, the opportunity is even bigger. Enhanced inventory visibility can reduce time spent searching for stock, protect procedure flow, reduce the risk of expired or recalled products being used, improve traceability of implants and devices, and free up space in busy clinical areas.
The real constraint is not intent but a lack of trusted, timely inventory data
NHS procurement leaders are operating in a highly constrained environment, with rising demand, tight revenue budgets, limited capital, workforce pressure and concerns around supply chain resilience. Amid this uncertain backdrop, over-ordering is often a rational response, rather than a sign that teams do not understand the importance of stock control.
The challenge is that many Trusts are still trying to manage modern clinical inventory through fragmented systems, with localised processes and limited data that often does not reveal the full picture. Some areas use structured systems, scanning or RFID-enabled tracking, while others still rely on spreadsheets, clipboards, local knowledge and manual counts.
That variation matters because inventory is not just a procurement issue. It affects finance, operations, clinical productivity, estates, sustainability and patient safety. It also affects the daily experience of frontline staff: stock stored in crowded clinical areas, or held too far from where it is needed, can cause unnecessary bottlenecks.
At a glance
- Inventory control is an under-utilised non-pay spend value lever: Better visibility can help Trusts release cash, reduce waste and improve control over stock that has already been purchased.
- Over-ordering is often a rational response to uncertainty: Where teams lack confidence in stock data or replenishment, they create local buffers to protect clinical delivery.
- Waste is predictable, not accidental: Expiry, obsolescence, duplication and substitution are more likely when stock is dispersed, poorly tracked or not actively managed.
- Inventory optimisation should protect clinical flow: The aim is not to strip stock out indiscriminately, but to hold the right stock with enough confidence to reduce avoidable excess.
- The safety case is central: Better visibility supports recall management, expiry control, implant traceability and point-of-care assurance.
- Digital and AI tools can accelerate value: IMS, barcoding, RFID, demand analytics and AI-enabled forecasting can improve decisions, provided the underlying data and operating routines are strong.
- The opportunity is practical, urgent and near-term: Better visibility, demand planning and replenishment parameters can reduce pressure and release capital without reducing patient activity.
The gap between ambition and results
Most Trusts already recognise the importance of better inventory management. Their ambitions are clear: reduce waste, improve stock availability, release cash, give clinical teams more confidence that they can access the products they need, and improve safety through stronger traceability.
The challenge is translating that ambition into repeatable operational control. NHS Supply Chain has identified in-Trust inventory management as a major opportunity area. Its IMS programme notes that NHS Trusts hold more than £1 billion of shelf stock and that normalising inventory management and point-of-care solutions is key to releasing one-off and recurring cost benefits.
NHS Supply Chain IMS
There is already a strong foundation to build on. Scan4Safety, GS1 standards, point-of-care scanning, RFID tagging and related inventory initiatives have demonstrated the value of linking products, places, people and procedures. Scan4Safety describes inventory management systems as using barcode scanning to track medical products and consumables across NHS settings, giving organisations real-time visibility of stock levels, locations and expiry dates.
Scan4Safety inventory management
While that national direction of travel is important, structural barriers at Trust level are hampering progress. Inventory is often managed differently by team, ward, specialty or site, with some areas showing strong discipline and others relying on local workarounds.
The result is a control gap. Finance and procurement teams may know that spend has already happened, but they do not always have a single trusted view of what stock is held, where, how quickly it moves, whether it is at risk of expiry, or what should be reordered.
Why the current model made sense
It is important to acknowledge how the status quo emerged. Local stockholding is not a failure of discipline and, in many cases, it has been a sensible response to the environment NHS teams operate in.
Clinical areas need assurance because theatres cannot wait for a missing product, wards cannot risk routine supplies being unavailable, community teams need equipment and consumables to support care outside hospital, and specialist services may depend on specific implants, consumables or medicines. Pharmacy models differ, supplier reliability varies and physical estate constraints are real.
When central systems are incomplete, local teams compensate by building informal safety nets, holding extra stock and relying on people who know where things are. That model may have been necessary and, in some settings, parts of it still are. However, while the current system was created out of necessity, it is by no means optimal.
Why it does not work well enough
The financial and operational context has changed. Non-pay spend remains under pressure, storage capacity is constrained, clinical time is too valuable to be spent locating stock and waste from expiry is becoming harder to justify.
Poor visibility creates several predictable effects. Teams over-order because they cannot rely on the data, which increases the amount of working capital tied up in stores, cupboards and local areas.
Stock also becomes harder to use efficiently. Products may expire in one location while being reordered elsewhere. Substitution can increase when the right item is not visible or accessible. Manual effort grows as staff spend time checking, counting, chasing and correcting. That labour may not always appear in the inventory line, but it is still a cost to the organisation.
The consequences for patient safety also matter. Weak visibility can make it harder to identify expired or recalled products, trace affected patients, or confirm that the right product is both available and suitable at the point of care. Scan4Safety evidence shows the potential impact of better tracking, including major reductions in recall times and clinical time being released back to direct caregiving.
Scan4Safety evidence
Procurement also loses leverage when the underlying stock picture is incomplete. It becomes harder to manage demand, optimise replenishment, challenge variation, support standardisation, or give finance colleagues a clear view of what can safely be released.
What good now looks like
The direction of travel should be clear: Trust-wide inventory visibility, supported by standardised processes, better data, digital tracking and point-of-care discipline.
This does not mean every Trust needs the same physical model. Large teaching hospitals, specialist centres, district general hospitals, community services and integrated care models will all have different requirements.
Nor does it mean reducing safety stock blindly. In critical areas, resilience must be the core consideration. However, it should also be based on evidence, usage, lead times and clinical risk, not local uncertainty alone.
The shift is practical rather than theoretical. It means moving:
- from locally held knowledge to organisational visibility
- from reactive ordering to demand-informed replenishment
- from manual counts to more trusted data
- from hidden buffers to clinically justified safety stock
- from fragmented local practices to standard rules, with exceptions made where necessary
- from procurement-only control to joint Finance, Procurement, Operations and Clinical ownership
In other sectors, this would be considered basic operational control. In the NHS, implementation is more complex because clinical risk, estate constraints, product variation, technology maturity and workforce pressure all interact. But, that complexity is precisely why a structured approach to delivery is so crucial.
What this changes for leaders
For NHS Finance, Procurement and Operational leaders, inventory visibility should be treated as a core non-pay saving opportunity, not as a back-office improvement project.
The prize is not simply less stock. It is better control, clearer working capital visibility, fewer avoidable delays, stronger safety assurance and a more reliable way to reduce excess without undermining clinical confidence.
That matters because inventory control is one of the few non-pay spend value levers that can quickly and effectively create financial headroom. It gives leaders a practical route to release value from existing stockholding, rather than relying only on future price negotiation or activity reduction.
It also supports the NHS’s wider direction of travel. As care increasingly moves out of hospitals and into community and neighbourhood settings, inventory becomes more distributed. Community diagnostics, home-based monitoring, wound care, continence care, vaccination, medicines optimisation and remote-care models all depend on reliable access to the right equipment, devices and consumables.
Digital and AI solutions can support this. Modern inventory systems, barcoding, RFID, automated replenishment, predictive demand analytics and AI-enabled exception reporting can all improve decision-making. Crucially, however, technology only delivers value when the underlying operating model is clear: clean product data, consistent scanning, agreed replenishment rules, clinical engagement, benefits tracking and strong accountability.
Practical steps to move from visibility to value
For CEOs, CFOs, COOs, Medical Directors and Chief Nursing Officers seeking sustainable financial improvement, five priorities stand out.
1. Establish a Trust-wide inventory baseline
Start with a clear view of what is currently held, where it is held, how much space it uses and which areas carry the greatest value or risk.
While this does not have to provide a perfect overview, leaders need enough of a baseline to identify the largest stock pools, the most manual processes, the most congested storage points and the areas where expiry, substitution or over-ordering are most likely.
A delivery partner can accelerate this by combining data extraction, site walkthroughs, clinical interviews, stock sampling, spend analytics and rapid opportunity sizing.
2. Segment stock by clinical risk and usage
Not all stock should be managed in the same way. High-risk clinical items, fast-moving consumables, slow-moving specialist products, implants, medical devices, laboratory consumables and pharmacy-adjacent stock require different policies.
A practical segmentation model helps Trusts distinguish between essential safety stock and avoidable excess. This reduces the risk of one-size-fits-all reduction targets that undermine operational confidence.
3. Set replenishment rules based on demand, not historic behaviour
Many local stock levels are based on historic behaviour, perceived risk or inherited practice. Replenishment parameters should be reviewed against actual usage, forecast activity, expiry risk, storage constraints and lead times so that stock levels reflect need rather than custom.
This helps reduce excess without asking clinical teams to accept unsafe levels of availability. It also gives procurement and operations teams a stronger basis for discussing stock changes with their clinical colleagues.
4. Reduce dead, obsolete and duplicated stock
Expired, obsolete and very slow-moving stock should be made visible and actively managed. This is often one of the quickest areas of opportunity because it does not involve reducing clinical activity.
The requirement is clearer identification, ownership and review. Without that discipline, dead stock will remain hidden from view until it becomes waste, incurring further costs.
5. Standardise where helpful, localise where required
The NHS does not need standardisation for its own sake. It simply needs consistency where inconsistency creates cost, waste, risk or avoidable variation.
Core data standards, stock categories, product catalogues, replenishment principles and reporting should be consistent. Local clinical requirements should still be reflected where they are justified by either the activity, risk or service model.
6. Make clinical confidence and safety part of the design
Inventory optimisation will fail if clinical teams simply see it as a stock removal process. The message should be different: better visibility should make it easier to find what is needed, reduce time spent searching, protect service delivery and strengthen safety.
Clinical teams need to see that the process improves reliability, not just the Trust’s finances. That means designing the model around safety stock, recall response, implant traceability, expiry control, point-of-care checks and clearly governed clinical exceptions.
7. Treat implementation as an operational change, not just another system
Technology can help, but it is not the whole answer. Trusts need clear ownership, data discipline, operational routines, adoption support and benefits tracking.
Without those foundations, new systems risk becoming another layer of variation rather than a route to control. The measure of success is not whether a tool is implemented, but whether inventory decisions become more visible, consistent and trusted.
A delivery partner can help Trusts move faster by building the business case, selecting the right technology pathway, mobilising clinical engagement, sequencing implementation by value and risk, and tracking benefits through to Finance, Procurement and operational performance.
The role of the centre
Trusts will need to lead local delivery, but the centre also has a vital role. NHS Supply Chain, NHSE regions, ICBs and the emerging NHSE/DHSC commercial centre can help scale best practice by supporting common data standards, programme funding, best-practice business cases, technology options, benefits methodologies, and access to experienced delivery partners such as Bain and Proxima.
Why inventory visibility now belongs on the Trust leadership agenda
The NHS has already made significant progress in improving many areas of commercial discipline. The next stage of non-pay spend control will require more than better buying. It will require better visibility of what has already been bought, where it sits, how it is used, and how it affects cost, flow, safety and productivity.
From theatres to wards, laboratories, community teams and specialist services, inventory sits at the intersection of finance, clinical reliability and operational performance. Managed well, it can release cash, reduce waste, protect clinical delivery, improve safety assurance and free staff time. Managed through fragmented data and local workarounds, it will continue to absorb capital, space and staff effort that the system can ill afford.
For procurement leaders, the opportunity is clear: make inventory visible, make replenishment more intelligent and make stockholding a Trust-wide activity.
For CFOs, the imperative is clear: quantify the working capital opportunity, capture recurring savings and elevate inventory from an operational issue to a strategic non-pay savings lever.
For clinical and operational leaders, the benefit is practical: the right products available when and where they are needed, less time is lost to searching and counting, stronger safety controls are established, and there are fewer avoidable disruptions to care.
Bain and Proxima can help Trusts, provider groups, and collaboratives and ICBs put this on the leadership agenda, quantify the opportunity, build the investment case, engage clinical teams from the outset, and deliver the operational changes needed to realise the benefits. The objective is not to hold less stock at any cost. It is to hold the right stock, in the right place, with enough confidence to run leaner, safer and more productively.
