How would you describe your current relationship with procurement?
Having an in-house procurement function to provide specialist advice and support is the way forward for us. Therefore, I want to have a great working relationship with our procurement colleagues and aim to ensure they have a strong understanding of the development team’s activities and our price and value drivers. Only then can they offer the appropriate advice, and help deliver a tailor-made procurement solution.
What are the areas where procurement really adds value to your function?
The development team can deliver a successful procurement to meet the necessary quality and cost drivers. But this is not the same as delivering the quality and cost benefits to the Spectrum Group that can be derived through integrated procurement ‘collaboration’ across business functions.
Our group board has a holistic view of procurement. The procurement strategy is positioned so that it incorporates the needs of the group and is aligned to the corporate goals. However, annual budgets, and team KPIs that focus on budget annual variance, incentivise front-line behaviour to make cashable savings for the respective budget line. The fact that the group may have to add thousands of pounds in terms of intangible costs (such as the expense of processing 100,000-plus invoices from multiple sources) is not taken into account as the rush to meet year-end budget targets overtakes the value-added benefits of a collaborative procurement.
To overcome this problem, the group procurement manager and I have met with a representative from the Homes and Communities Agency (HCA) to discuss procurement best practice.
Is working with procurement as easy a process as you would like?
The foundations have been laid for performance improvements and for adopting a more consistent approach to commercial activity across the group.
As a result, the benefits of engaging our in-house experts are now starting to filter through the group.
People need to see their role in relation to what procurement can do – and therein lies the challenge. Notwithstanding competing priorities, procurement needs to form part of people’s day job. I see procurement as being business partners. They develop a better understanding of our business drivers the more I engage and work with them. When other business functions follow suit, the outcome for the group will be increased value for money, improved efficiency, and consistency in terms of process.
What tip you would give to procurement about further developing the working relationship?
Procurement is the one part of the group that needs to be empowered to coach and, if necessary, challenge silo purchasing practices. It is there to guide decision-making and help influence others in the organisation.
So my top tip would be that when we are making procurement-related decisions, the procurement team ensures that the process adopted is underpinned by our need to be able to clearly identify what is adding value in terms of savings to the bottom line. This includes the need to capitalise on our ability to save cost in terms of increased effectiveness of services across the group.
☛ Paul Read is director of development at Spectrum Housing, a housing association in the south of England, which owns and manages 18,000 homes, maintains 35,000 homes and is currently embarking on a 2,500-home development programme