Inside Procurement 2019 - Unfolding the Future www.pfh.co.uk - Social Value UK
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Contents Update from Steve Malone, PfH Managing Director .....1 A Smart Future for Social Housing Procurement .....2 Housing Solutions Procuremnt Consultancy Case Study .....4 Redefining Social Value .....6 Improving Industry Competence: Procurement’s Role .....8 Hafod Prourement Health Check Case Study .....9 PfH’s Procurement Solutions .....10 PfH Nominated Suppliers .....11
Introduction This year we have had the privilege of collaborating with a number of credible speakers from both within and outside of the housing sector at PfH Live 2019. These speakers supported us in our quest to explore three core themes throughout the event; Technology, Social Value and Compliance. These themes remain highly relevant within the sector and we have decided to further explore these within this year’s Inside Procurement publication. In addition to another impactful PfH Live event, we have also successfully launched a series of new frameworks and DPS offerings over previous months. For more information on PfH’s performance, outcomes and outlooks click here to download our 2018 Annual Report. Our full procurement service solution is stronger than ever, delivered by a diverse range of frameworks, consultancy, technology and DPS services. We now offer an end to end solution covering the full spend category that is flexible, compliant and accessible for all our Members. Steven Malone Managing Director PfH 1
A Smart Future for Social Housing Procurement By Neil Butters, Head of Procurement use it to forecast their spend and Blockchain has also been touted at PfH control costs. At PfH, we’re drawing as a tool to increase investment on machine learning (a type of AI that in social house building, making it Imagine a future world where chatbots, categorises data) to check if housing easier for investors to withdraw their algorithmic trading and blockchain association staff are buying products money quickly if needed. The ability work together to manage big chunks off-list at higher rates. It’s also helping for anyone, anywhere to effortlessly of your housing organisation’s buying to match landlords’ transactional trade in and out of an investment via process. Human intervention won’t information with external data to see blockchain could make it cheaper for be needed for any transactional if they are paying over the national housing associations to raise finance. purchasing, freeing your team to average for certain products and focus on complex, judgement-based supporting them to drive down supplier EHAB, a data and process procurement. prices. management platform working in affordable housing is using blockchain How could this buying process of the Blockchain too is being used in technology to reduce admin costs and future work in social housing? Maybe pockets of the sector. This powerful payment delays during construction. your grounds maintenance team need technology creates a highly secure They are creating layers of smart new fences. Instead of contacting and transparent collection of records contracts so that many of the time someone in procurement, they will talk that can’t be changed, deleted or consuming and costly tasks which online with a chatbot who asks what tampered with. Whenever a transaction happen during the building process they need and agrees a specification. is made it is logged as a block and can be automated. recorded permanently on a public Powered by AI, this interactive ledger. agent will collect data, auto-assign conversations and create sales leads All transactions on the blockchain in the CRM system. An automatic are available for everyone to see, so trading programme could then pick organisations can be immediately up these leads and submit them to held accountable for any issues. This a market centre, negotiating with promotes trust between buyers and potential suppliers robotically (via pre- suppliers, cuts fraud and improves approved lists) and agreeing a price. compliance. It also speeds up transactions as each stage of the The purchase would be registered on contracting and payment process the blockchain and fulfilment monitored is automated and can only happen through to final delivery of the fences. when key criteria are met, boosting Payment will be made promptly on staff productivity and reducing admin receipt of the goods and a chatbot costs. Data is highly secure within contacts the grounds maintenance the blockchain – no one can copy team to ask how happy they are with or edit records and highly sensitive their purchasing experience. information can be hidden in a private blockchain. This forward view of procurement isn’t happening yet but many of these Although it’s not yet widely used in emerging technologies are being used social housing, some larger suppliers separately in social housing. Take are looking to adopt blockchain chatbots for instance. In some housing around construction, new build associations, tenants can engage financing and energy provision. in human-like conversations with interactive agents to request a repair, A local renewable energy project get advice on how to apply for housing in a Brixton social housing estate is support, report anti-social behaviour using blockchain so tenants can trade or ask about shared ownership energy with each other. Electricity is options. Available 24/7, it is hoped generated from a solar PV system on that talk bots will improve the customer a housing block’s roof and stored in a experience for residents. battery. Residents can access their own allocation of the energy via an app or Artificial intelligence is also being put trade it with their neighbours. to work internally - around business improvement. Some social landlords 2
Overall, the social housing sector has been slow to exploit blockchain. Barriers include the high energy consumption of the powerful computing systems needed to operate the technology but also the lack of adoption in the supply chain. If suppliers aren’t using blockchain for procurement, then there’s less incentive for a housing association to do so. It will take a few large merchants or global contractors to break this deadlock, implement their own blockchain and pass it down the field to the end user. I can see this happening around the manufacture of building materials, through to the construction and then asset management and maintenance of homes. Integration is at the heart of the future vision I set out at the start of this piece. To fully automate task-based purchasing, we need to link all these technologies together rather than just using them in isolation. That bit of the puzzle is still missing and the sooner it is cracked, the better. 3
Housing Solutions: Procurement Consultancy Case Study Housing Solutions provide good quality, affordable homes to rent and buy across the South East of England. Established in 1995 they now own, manage and maintain more than 7,500 properties across Berkshire and Hampshire. They offer a wide range of housing options, including affordable homes to rent, properties to buy under shared ownership, market rent properties, and specialist accommodation for older people and people who need care and support to live within the community. Aims and objectives With the organisation suffering from a combination of short term appointments and unsatisfactory performance from a procurement point of view, the newly appointed procurement resource quickly found the workload unsustainable and the Housing Solutions Executive Team recognised that an assessment of their practices and performance was required, not only to start delivering the benefits of a professional procurement service, but also to understand how their infrastructure compared with best practice in the Housing Sector. Innovation and creativity Feedback from local suppliers • Provide longer term contract suggested that previous tender visibility for suppliers which in turn Through effective stakeholder exercises conducted had been overly will lead to increased investment engagement and a longer-term complex and with short contract terms in jobs, training and social value strategic view of contract requirements which created challenges in arriving at creation we were able to transition Housing an optimal price point due to the short • Drive greater economies of Solutions from a high volume, short- term nature and lack of commitment. scale by moving to longer-term term, annual tender cycle to a longer- contracts and delivery models term contracting environment that By utilising a dynamic purchasing which maximise innovation and supported increased value creation, system to procure all planned efficiency optimised internal efficiency and local maintenance requirements, we were • Supported Housing Solutions’ community benefits. able to; localism agenda • Introduced more robust supplier Consultation with stakeholders • Deliver the procurement due diligence checks to mitigate highlighted the desire to award a programme in a significantly risk and provide on-going higher proportion of contracts to locally reduced timeframe assurance based businesses whilst at the same • Play a lead role in pre-market time delivering improved value for engagement and stimulation of money and higher quality outputs. the local supplier markets 4
Results Spend analysis is now embedded as a Other benefits achieved: core principal for forward procurement As a result of our work with Housing planning; adding a comprehensive • Contracts in place for 90+% of Solutions, the procurement function and transparent layer to their decision- spend • All major contracts was relaunched with greater focus making to ensure the annual value have been addressed and are on strategy and as a business targets of 7% with KPIs to ensure this in formal contracts • Culturally enabler. There is now an enhanced is achieved. Now Housing Solutions the business promotes the role procurement culture within their understand their spend behaviour, they of procurement as a business organisation which has inspired a now have a procurement environment enabler far more positive perception of the which is strategic in nature, proactive, • Immediate bottom line impact procurement function. There is restored and targeted to be a key tool in the • Long term performance confidence in the professionalism of delivery of wider business plans. improvement their procurement and as a result, • Strategic performance managed the reputation and credibility of the We helped Housing Solutions to adopt supplier relationships function was enhanced through the a 3-year procurement cycle with a • Intelligently controlled costs appointment of a high performing view on innovation that ensures all • Enhanced cost control and team. required activity is given adequate compliance consideration, is effectively strategised • Continuous innovation for We created a suite of procurement and delivers optimum value. optimised efficiencies and best management documents including Social Value has been embedded in practice Strategy, Policy, Procedure, template the procurement process in terms of contracts, & documents to enable our local contractors now being able to We’ve successfully equipped Housing client to contract compliantly as well as access and bid for tenders through Solutions with the procurement insight mitigate supply chain risk. the Dynamic Purchasing System, thus and capability to help them meet the assisting in improving the wealth of the huge challenges they’re facing. We’ve local community. given them the spend intelligence and innovative procurement solutions that have helped them to drive up savings, drive out cost and mitigate risk. “Housing Solutions engaged the services of PfH to undertake a full review and health- check of the strategic procurement function across the organisation, with a brief to provide recommendations for possible areas of improvements for greater enhancements to procurement processes and avenues to achieve greater value for money. PfH identified a number of key areas enhancements both to processes and avenues for achieving greater value for money, we have since continued to utilise their services to drive our programme of major procurement projects. Our lead consultant has quickly developed excellent relationships across the organisation, achieving buy-in and collaboration from key stakeholders. He is respected for his knowledge and expertise, in particular his experience within the asset management area of the business. Whilst always the professional, he brings a welcomed down-to- earth approach, demystifying procurement and as a result taking people on the journey throughout the process. With the assistance of PfH we expect to have a stronger approach to procurement embedded within the organisation and to substantially increasing our targeted category savings throughout 2019/20”. Carol Lovell Director of Corporate Services, Housing Solutions 5
Redefining Social Value By Ben Carpenter, CEO at Social It is very common for social value So, beyond ‘making people’s lives Value UK targets in many sectors (including better’, what do I mean by social and housing) to centre upon local environmental wellbeing and how Ever since social value was enshrined economics and keeping money within can housing associations create this in law seven years ago, it has become a particular region - local jobs for local type of social value? Interestingly, synonymous with a handful of key people, local apprenticeships and a recent report from the all-party topics. One of these is local job using local suppliers. parliamentary group on wellbeing creation and another is economic economics called for the health and growth through support for SME These are all worthwhile initiatives that happiness of citizens to become the suppliers. may be creating social value, but my main aim of government policy rather aim now is to challenge procurement than economic growth. For a number The definition of social value in the leaders to re-examine what social of years now, the Office for National Public Services Act is deliberately value means to them. Yes, it can be Statistics has been measuring the broad, encompassing ‘the social, about the ‘local pound’ and local jobs nation’s quality of life, analysing economic and environmental wellbeing but, surely, we must be thinking beyond areas such as health, relationships, of a place’. Having such an open this? education and skills, what individuals meaning has allowed buyers and do and where they live. We must suppliers of public sector contracts to It’s clear that the economic wellbeing start embracing this if we want the be flexible and innovative in the way of a place - local spend and job Public Services Act to drive meaningful they apply the act. Flexibility is to be numbers - is more tangible and easier change. welcomed; at Social Value UK we are to measure than the social aspect such not advocates of a one-size-fits-all as personal wellbeing. However, as Using social value and individual approach to delivering or measuring a result, and somewhat ironically, the wellbeing as a metric to assess social value. However, it is clear that part of the Public Services Act that is value in society is really about going such a wide-ranging definition is directly about making people’s lives beyond the economic changes and causing some confusion and perhaps a better, doesn’t always get the attention understanding how our activities lead lack of focus on measuring what really it deserves from buyers. to non-financial changes in people’s matters. lives. These could be intended positive changes, but they could also be unintended negative changes. For example, if local jobs are created by awarding an asset management contract to a SME supplier - but they are all zero hours contracts - then I would question whether people’s lives and their individual wellbeing is being made better. The same scrutiny must be applied to the employment practices of a contractor tasked with a more implicit social value contract such as adult social care. If the workers providing care services are all on minimum wage, over worked and under supported, then how is such a scheme creating net positive change in people’s lives? Housing associations awarding such contracts must consider the quality, not just quantity of employment generated by procurement activity when doing their social value sums. 6
Mental health, financial wellbeing Social value is of course about and life satisfaction are all critical delivering services with and for the factors here and that’s why I’m calling community - whether part of the core on social landlords to treat their contract or through additional work). employment practices as part of their It can also be about stimulating social value work. If social value is local economies. But let’s not lose about creating positive influences in sight of the fact that, at its heart, the people’s lives, then the hundreds (or social value act is about changes in thousands) of people employed by a individual wellbeing and one of the housing association and their supply best places to start considering this chain is a good place to start. In fact, is under your own roof, managing the the amount of value your organisation experiences of people within your own creates from small community workforce. initiatives (CSR type activities) will probably pale in comparison to the impact you can have on the lives of your employees and their families through positive workforce initiatives. Many social housing providers may not view the way in which they treat employees as an indicator of social value, yet they probably already have lots of information to evaluate this, as do their suppliers. Employee engagement data about job satisfaction levels, whether staff members feel respected, if they’ve received the training or the tools they need do their job, is now commonplace – and a good starting point for social value improvement. This is also about diversity and inclusion in the workplace, the degree to which employees are consulted or engaged on certain issues, gender representation and pay ratios. Similarly, it’s about health and safety – not just in the traditional sense of preventing accidents on site but in terms of proactively avoiding stress and poor mental health amongst the workforce. I’d like to see more housing associations reporting on how they and their suppliers are using this type of social value data to create positive changes for people in the future. For instance, how do figures on diversity, workplace happiness or part-time contracts inform how an organisation employs people in the future? Are you creating jobs or opportunities for people who wouldn’t normally have the chance? 7
Improving Industry Competence: Procurement’s Role By Adrian Dobson, Executive Director The proposed building safety This links to the importance of Professional Services at Royal regulator would establish a committee continuity in project teams. In modern Institute of British Architects that oversees a comprehensive procurement it has become unusual for accreditation system. Every individual full design teams to be involved in a Last month, almost two years since in a duty holder position – from trades project from the outset right through to the Grenfell Tower tragedy, the to professionals – would be included the end. This is echoed on client side, government announced a consultation on a competency list and be legally with those social housing officers who on proposals to set up a national responsible for adhering to regulations sign off a project often being different Building Safety Regulator. Part of and meeting new standards. from the team that initiated the work this new watchdog’s brief will be with the architects. This fragmentation to improve industry competence, The procurement process will play was criticised in the Hackitt review something the construction sector was an important role in supporting this and procurement teams are in a severely criticised for in the Hackitt new regulatory regime. From sourcing unique position to put this right – to Review. specialist architects, surveyors and some degree. Their vista across their engineers who can advise on the organisation and their involvement In her interim report of the design, engineering and fire safety at each stage of the process means Independent Review of Building of new buildings, to the performance they can point out disconnections Regulations and Fire Safety, Dame management of suppliers and and promote continuity in both teams Judith Hackitt said it was too hard to contractors appointed to supply and and information. The value that the identify people with responsibility in install materials, social landlords will procurement department can offer to the current building and fire regulatory be responsible for making sure the this process must be recognised. regime. Fragmentation and complexity professional advisers and contractors across the supply chain means that they buy in (and also those staff they Strong contract management is also accountability is cascaded from employ directly) have the right skills. key to ensuring building safety. The consultant to consultant, contractor to If they fail in this duty, they will face new regulatory system will introduce a sub-contractor and supplier to supplier. serious consequences. series of gateways or fixed checkpoints This causes ambiguity and confusion in the building process to ensure that around roles and duties. This new regulatory regime will what is constructed actually meets the inevitably cost contractors, sub- approved initial design and fire safety For social landlords, ensuring that contractors, consultants and strategy. Social housing procurement suppliers, contractors and professional developers money and some may teams will be key to ensuring that consultants and specialists are be slow to respond. Social housing designers, contractors and specialists sufficiently skilled has always been providers must put tender checks in meet the requirements of each an important consideration. But with place to ensure they only procure from stage through robust monitoring and the government’s proposals for reform suppliers that have adopted the new performance management. of building safety regulations shining systems. Are the correct duty holders the spotlight on accountability; RSLs, in place and does everyone have the The Grenfell Tower Fire resulted in housing associations and council right accreditation? the largest loss of life in a single landlords must now take a forensic peacetime building fire since the Exeter approach to assessing professional Social landlords must also consider Theatre Royal fire of 1887 in which 186 competency. how they improve independent people died. Many people believe that oversight across their asset it should and will result in a turning The government’s recent consultation management and new build projects, point in the UK approach to fire safety proposes a regime with defined duty including commissioning additional regulation. Procurement functions holders who have clear responsibilities layers of quality control such as buying have a big part to play, ensuring that throughout a building’s design, in a clerk of works or an inspecting in the future, supply chains consist of construction and occupation. They architect - another way to maintain individuals and organisations who are want to mirror the existing Construction the golden thread of design intent true custodians of the safety of social (Design and Management) Regulations and ensure that the building being housing buildings and the tenants that 2015, ensuring there is a client, such constructed is the same one that was live within them. as a social landlord, appointing a designed. principal designer, principal contractor and a building safety manager on each project. 8
Hafod: Procurement Health Check Case Study Celebrating their 50th anniversary in the potential of their buying power with a detailed understanding of 2018, Hafod have grown from a small and to explore options and benefits of the organisation’s spend profile housing association to be one of the installing a professional procurement and behaviours allowed PfH to largest providers of housing, care and resource. provide a comprehensive report support in South Wales. Operating with targeted recommendations to from their head office in Cardiff, Engaging with Procurement for facilitate procurement within Hafod the Company work across 9 local Housing as a new provider, Hafod as a strategic business enabler. In authorities, employ over 1,200 staff, were keen to appoint a partner with addition to providing a procurement have a turnover in excess of £50m, and the ability apply expert knowledge road map to excellence, PfH delivered are committed to ‘Making Lives Better’ and experience to set out a path to a central procurement strategy, a for their customers and communities. procurement improvement. detailed suite of procurement guidance documentation for non-specialists, Following a decision to centralise their Applying a standard, but tailored and created a target led forward group of companies, Hafod identified methodology, PfH delivered our procurement plan for major spend significant opportunity to review Procurement Health Check service areas. A key element of the final and refresh their organisational and which encompassed on-site informal report to Hafod was highlighting the strategic approach to procurement. interviews with key stakeholders benefits of installing a professional Having previously carried out and business leaders, spend procurement resource complete with procurement on a project by project analytics, and a detailed review of an options appraisal. basis, Hafod were keen to understand existing procurement infrastructure. current strategic positioning of Understanding organisational culture procurement within the organisation, and attitudes to procurement, coupled “The procurement health check carried out by PfH was an invaluable exercise which provided detailed analysis of our procurement activities. Furthermore, the review gave us the knowledge and tools to introduce procurement as a core strategic principle. We look forward to continuing our partnership with PfH as we embed our new approach across the organisation, ensuring we achieve all the benefits of a well-managed procurement service.” Gareth Yeoman-Evans Director of Finance and IT Hafod Resources Results Following delivery of the project and a senior leaders debrief, Hafod have fully embraced the changes and recommendations of the PfH Health Check report, and are seeking to relaunch organisational procurement as a fully strategic service. Enlisting the further support of PfH, Hafod have installed a highly functioning Procurement Business Partner to oversee and champion an organisational refresh to procurement and to actively deliver the highlighted programme of major procurement projects. Unlocking the potential of effective procurement, Hafod are embedding a methodology which guides and empowers budget holders to carry out procurement compliantly and efficiently, and are proactively addressing major areas of spend to deliver enhanced value to Hafod’s customers and communities. 9
PfH’s Procurement Solutions Our full service offering PfH can offer an end to end support solution for all of your procurement needs. Encompassing a diverse range of frameworks, dynamic purchasing systems (DPS), technology and consultancy, we provide a bespoke level of service for each of our Members based on their individual needs and expectations. DPS Our Dynamic Purchasing Systems offer a fresh new approach that provides business frameworks benefits for everyone and fits seamlessly into local industrial strategies around employment opportunities and social value. Our frameworks offer three different compliant routes to market, including: • Direct call off • Mini competition • Premium mini competition Customers using our frameworks benefit from preferential pricing improving bottom-line performance and return on investment. consultancy PfH Consultancy delivers sector leading procurement technology techniques that deliver true, measurable, value. We bring a depth of insight and experience from the housing sector and beyond Technology has been a huge contributing to ensure your approach to factor to the development of procurement. procurement is not limited to sourcing. PfH offers a range of technology led procurement solutions in addition to stand alone products to enhance our Members procurement processes. 10
PfH’s Nominated Suppliers Support Services Ambient & Chilled Janitorial, Workwear Office Depot Tunstall Food & PPE Batleys Foodservice Arco Print Management Welbeing Bidfood Arrow Altodigital Telecommunications Blakemore Foodservice Banner Arena Group 4Net Technologies Brakes Bros Ltd Bates Office Capita Britannic Technologies Creed Foodservice Bunzl CDP Print Management Daisy Communications H.N. Nuttall Limited Greenham GPS Document PCI Services Management Harlech Foodservice Nationwide Hygiene Office Depot Redcentric Solutions Group Lomond Fine Foods Ltd Office Depot Resource Social Telecoms MKG (Food Products) PWS Ricoh Ltd Philip Dennis Lone Worker SCC Foodservice Trevors Foodservice Alertcom Toshiba Turner Price Lone Worker Solutions Telecare & Telehealth Energy Orbis Protect Appello Inspired Energy Skyguard Centra EPS Office Solutions Close Circuit Security Solutions (CCSS) allpay Banner Legrand Electric Limited (Tynetec) PayPoint Lyreco Progress Lifeline 11
Planned Works Windows & Doors Technical Wardell Armstrong LLP Europcar Group UK Ltd Support Services A Connolly Baker Mallett LLP Wilde Consulting Ltd Inchcape Fleet Solutions Anglian Building BSW Constucting Ltd Wilks Head & Eve LLP Leaseplan Products Asset Fineline Charles Andrews Ltd Vehicle Lightfoot Purchasing Esh Clearwater Technology Citroen Limesquare Vehicle Limited Rental HMS Crofton Group Euro Commercials Shell UK Oil Products Limited Joedan EDP Consulting Limited Ford Quartix Limited Nova Group Hulley Kirkwood Isuzu Sortimo International Consulting Engineers Sovereign Group Identity Consult Limited Lookers Traffilog UK Wrekin Windows Integrated Water Man, Truck & Bus UK Telematics Services Kitchens Kartar Consulting Peugeot Venson Automotive & Bathrooms Solutions Axis Group PLC Lendlease Consulting Renault Furniture & Flooring CCG (Scotland Ltd) McAdam Design Renault Trucks Bates Office CLC Group Michael Dyson Rygor Commercials Crown Flooring Associates Ltd Jewson Ltd OCC QS Ltd Toyota David Phillips JTC Furniture Group Pellings LLP Vauxhall Motors Designer Contracts Magnet Pennington Choices Ltd Vehicle Fleet FRC Group Management Mi-Space (UK) Property Tectonics ACL Hire Ltd Gresham Office Limited Furniture Moores Furniture Group Rand Associates Alphabet UK Fleet Knightsbridge Furniture Consultancy Services Management Plumbing Trading Ridge & Partners LLP Bott Ltd Teal Supplies (PTS) Rixonway Kitchens Steel River Consulting Bri Stor Systems Ltd Wagstaff Ltd The Symphony Group Total Environmental BT Fleet Compliance Wolseley UK Turner & Townsend Daimler Fleet Project Management Management 12
Responsive Works Materials PROCare Heating Services Void Property Management Services Adaptocare Rexel UK Aaron Services CLC Group AKW Ltd. Stannah Stairlifts HMS DLP City Electrical Factors Travis Perkins Managed K&T Heating Mi-Space (CEF) Services City Plumbing Supplies Wolseley UK Liberty Gas Orbis Protect (CPS) Contour Showers Decorative Solutions Sure Group SPS Doorguard Edmundson Electrical Akzonobel Warmer Energy Services SW&L Grafton Merchanting B&Q PLC Commercial & The Sovini Group GB Domestic Appliances Jewson Crown Paints Ltd AO VPS National Merchant Dulux Decorating Centre Goodman Sparks Buying Society (NMBS) PHC Parts Johnstone’s Trade (PPG) WashCo Prism Medical UK Wilko Retail Ltd JLA www.pfh.co.uk 13
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