Money raised has been used to bring VR social experiences to people in supported housing ©Places for People
Money raised has been used to bring VR social experiences to people in supported housing ©Places for People

Procurement can act as a revenue generator

Places for People challenged its procurement to put passion before profit as buyer and seller

After discovering they were paying 3-6% extra on deals sourced through consortia, the procurement team at regeneration company Places for People decided to become a disruptor. They chose not only to take the work back in-house, but to sell the deals they made to others for lower fees and donate any extra revenue this made to social projects or to charity.

“When I joined in 2015, I noticed we were using quite a lot of consortia,” says director of procurement Alan Heron. “The team had thought this was free because the fees are paid by the supplier, but suppliers take that into consideration when they put forward pricing.” Thinking they could do better, he established the Procurement Hub.

“We thought, ‘if we were the customer, what would the perfect consortium look like?’ We decided it would mean lower fees, increased transparency and more help and assistance. So that’s what we tried to deliver.” Within four-and-a-half years, the Hub has gone from zero to almost 600 customers, competing against consortia that have been established for upwards of two decades.

Heron credits much of its success to what they offer and the way they operate. All the staff in the Hub are the procurement professionals who also buy for the Places for People Group. Their position means they understand what it is to be the customer, what internal stakeholders demand, specifications, time pressures, issues with contract management, and they use the same deals for their own internal customers. “We try to go the extra mile because that’s what we would want,” says Heron.

Challenging excess to charities

Places for People is one of the largest property and leisure management, development and regeneration businesses in the UK. It spends around £200 million annually providing goods, services and works to its customers across the UK and has a 2,000-plus supply chain of established providers.

The Hub’s customer base includes local authorities, housing associations, NHS trusts, universities, blue light and emergency services, central government departments and the Government of Gibraltar. It manages the balance of pre-arranging contracts with suppliers that take the hard work out of doing deals, while ensuring customers can still shape them to their specific requirements.

“It’s about functionality over extreme customisation,” says Heron. “It’s got to be credible but allow space for nuances and outcomes.” The Hub also provides consultancy to customers to help buyers and suppliers through the process.

Surplus money raised has enabled Places for People to provide support in getting people back into work, funding for a women’s shelter, the donation of iPads to disadvantaged families and to offset some of its carbon use.

By far the biggest chunk of funds has gone directly to charity, including more than £150,000 for Children in Need last year, as well as donations to Cancer Research, Macmillan Cancer Support and Guide Dogs for the Blind Association.

“We work for a housing association with a social agenda, so we wanted the Hub to have a social purpose,” says Heron. “We have a price point that is enough for us to grow the team to add expertise and affords us the ability to help support charities. Every single surplus penny goes into social housing projects through the group or to charity.

“We try to put back and that gives us all a lot of personal satisfaction.” Another boon has been the additional exposure and experience his team – which has almost doubled to 10 since the Hub’s inception – has benefited from, effectively working on both the buy and supply side for a variety of contracts.

Andy Winstanley, executive director at Places for People, tells Supply Management: “The Hub was created to provide market-leading procurement solutions to organisations which deliver value for money, transparency and social impact. We are very proud that as well as helping public sector bodies to procure the very best services and products, we are also able to support a wide range of charities and social value projects through our work.”

Level up: tech upgrade

In addition to managing all the supply chain and contracts required to run the business, the procurement team – alongside colleagues in IT – is currently building its own contract management system.

“We’re trying to look at all the systemic challenges of modern procurement and mitigate as many of those risks in an online digital platform as possible,” says director of procurement Alan Heron. “We’re quite progressive in terms of technology within our procurement department. More often than not, we’re the vanguards of certain software packages within the business.”