He points out that planning for the switch has been going on for some two and a half years. The aim, he says, is to save about £18m a year which can be put back into patient care. There are also significant service improvements to come through the process.
NHS Scotland spends over £1 billion a year, with more than 13,000 suppliers, on hundreds of products ranging from MRI scanners to scalpels, from pens to potatoes, from nurses uniforms to needles. It has 15 health boards.
There are also eight special health boards comprising organisations such as the Scottish Ambulance Service and National Services Scotland.
Historically, each board has sourced products for itself and there have been a variety of systems to distribute products to the hospitals. In some cases third party operators provided distribution to the point of use while other areas had a stores infrastructure.
This meant that a product could be sourced from a number of different suppliers and go through a variety of different channels resulting in a complex and costly supply chain with potentially a low level of service.
Reforming the procurement process so that products are sourced directly from the manufacturers and delivered to the NDC creates the opportunity for major savings.
Launched in 2005, National Procurement is responsible for ensuring that an efficient service of the highest standards in modern procurement practice is provided to all NHS Scotland organisations.
The division works in close collaboration with local NHS Boards and a diverse supply base to acquire, store and deliver goods and services efficiently, effectively and ethically. There are three main components: strategic sourcing, e-procurement & systems, and logistics.
On 30 March, Scottish health minister Andy Kerr officially opened the NDC at Canderside Toll, Larkhall. It will create some 240 jobs for warehouse, transport and administrative and clerical staff. It holds around 12,000 stock items delivering up to 3,000 lines a day operating on a 24-hour basis.
The NDC was built by Muirs Construction on behalf of Clowes Developments. Base build commenced in January 2005 and was completed in November 2006. Fit-out of offices and warehouse was completed on time in March 2007. Warehouse operations actually started at the beginning of February 2007 during the fit-out stage.
The warehouse has a floor space of 10,054 sq m, mezzanine floor space of 2,000 sq m and office space of 1,934 sq m. It has three goods-in doors and 11 goods-out doors.
It is fully racked and shelved and has 10,000 pallet and 8,000 shelf locations and is equipped with modern materials handling equipment. Staff levels will ultimately reach 150 warehouse and 140 office workers.
McKenzie points out that the system has been on trial for almost a year using an interim distribution centre so the health boards for Ayrshire & Arran, Lanarkshire, Dumfries & Galloway and The State Hospitals Board for Scotland are already using it.
The next big challenge is to migrate the Glasgow and Clyde region to the new system. This is the largest region accounting for about one third of all NHS consumption in Scotland. As a result, says McKenzie, it will move over in a series of stages between July and March next year. All the remaining health boards will migrate over by the end of 2008.
One of the key benefits of the system is consistency of service, says McKenzie. The old system was delivering service levels of 75-95 per cent while the new system is currently working at 97-98 per cent and McKenzie wants to improve on that.
Getting the new distribution centre up and running with a new system is clearly a major achievement but the challenges do not end there. McKenzie points out that he is bringing in new people to operate the warehouse and as a result “there is a knowledge base that we are having to acquire very quickly”.
Once the distribution centre is running smoothly, the next step, he says, is to expand the commodity base of the distribution centre.