When outsiders view your job as being about compliance and enforcing rigid practices it’s hardly surprising you end up tagged as the “procurement police”.
In the social housing sector few landlords are allowing their procurement function to play a wider strategic role and are missing out on the benefits this can bring to the whole organisation. Given the pressures housing associations are under – and the prospect of higher costs in the next financial year – it’s something CEOs should be treating as a matter of urgency.
I’ve been working with landlords on areas such as spend analysis to give them a better understanding of where their money goes and how it could go further. It’s all part of a journey they need to go on if they’re to adapt to the challenging financial climate they now find themselves in.
Cuts in government funding for social housing combined with the impact of welfare reforms on tenants have brought new uncertainties. But by putting procurement at the heart of a move towards a more commercial mindset, housing associations will be better equipped to withstand these pressures.
However, there’s a major hurdle to overcome. Mention the word ‘commercial’ and you open up a seemingly endless debate in the sector about whether landlords should retain their social purpose and outlook or behave more like private enterprises. The reality is they can do both.
Armed with greater intelligence about the way they are using resources, procurement teams can make more informed, evidence-based judgements that deliver better value for money. It’s the kind of practice that’s common in the private sector. It drives better performance from suppliers, frees up resources for reinvestment and generates greater social returns.
Using spend analysis with one landlord I was able to identify that 38 per cent of invoices cost more to process than the value of the invoice. Examining just one area of spend immediately flagged up unnecessary costs of around £250,000.
Among the few landlords pushing ahead on this agenda is Sanctuary Group. One the largest registerd social landlords in the UK, over the last three years it has made a significant investment in its procurement function to take a more comprehensive, intelligence driven approach. It is already paying dividends with savings of more than 40 per cent identified in some areas of spend.
Using tools like spend analysis can be the starting point towards a more commercial approach and in doing so social landlords will soon discover the social hearts versus business minds debate is redundant.
☛ Rob Peck is strategic procurement manager at Procurement for Housing. PfH is carrying out research into the future of social housing procurement – email email@example.com for more information.