Efficiency savings: What can social landlords learn from universities?

Published by Jon Land for 24dash.com in Housing

By Mike Haslin, deputy director of NWUPC (North Western Universities Purchasing Consortium)

Universities and social landlords. Not obvious partners when it comes to procurement. But look harder and you’ll find a lot of common ground. Both sectors are facing similar challenges amid the cuts agenda. Both have had state funding reduced dramatically and both are facing threats to their income streams.

So when it comes to generating significant efficiency savings, what can housing providers learn from higher education institutions and vice versa? I would argue that out of all state funded organisations, universities have been hit hardest when it comes to reducing their cost base. As a result procurement professionals in the sector have had to act quickly and dig deep when it comes to developing fresh ways to cut spend.

But many of the efficiency lessons learnt along the way are highly relevant to housing providers. I’ll be talking to social landlords about many of these lessons at procurement event PfH Live on 12 June. My message will be simple. Amid the current economic uncertainty, it’s vital that landlords, universities and other public bodies look beyond the more obvious players who are central to their supply chains if they are going to find new and innovative efficiency ideas. That means taking the leap and networking outside their own sector.

One lesson that is highly relevant to the social housing sector centres on changing supplier relationships. In today’s climate it is essential that the connection between client, for example social landlord, and service provider moves from ‘cosy’ to ‘collaborative’. Now the housing and HE sectors are seeking higher levels of value for money than ever, the merits of the traditional win-win relationship are being questioned.

This is a bigger issue now that many more suppliers are turning to the courts when they lose contracts. Litigation around university tenders has increased significantly in the last three years and I know from colleagues in the housing sector that they are beginning to experience a similar picture. It is expected that things will get worse and even more challenges will arise from disgruntled suppliers when unsuccessful at ‘further competition’ stage.

In the past, when a firm didn’t win a contract they might have tried to win the work next time. But in today’s difficult climate these companies might not be around next time and as a result suppliers are a lot more aggressive. Housing providers need to adapt to the new requirements of professional public sector procurement where transparency is key.

Another focus for both housing and higher education in the next few years will be compliance. Purchasing outside of framework agreements is something that has happened within both sectors for many years but this can no longer be tolerated. Organisations must collaborate across the public sector to identify new methods that ensure higher levels of compliance. Eliminating deviant spend will be an important way of generating savings.

The perception of the procurement function is also changing. Some departments within universities and housing organisations still hide behind specialisms to prevent procurement playing a big role. They might say that the buying team can’t purchase X because only staff working in that department know about it. Nowadays procurement professionals are highly skilled and purchase a wide range of good and services. HE institutions are coming down hard on this outdated perception of procurement amid the cuts agenda and the same approach must be taken by housing providers.

A report for Universities UK recommended that nearly one third of university expenditure should be delivered via collaborative agreements. Similar recommendations were made to social landlords and other public bodies in the National Audit Office’s report on collective buying in 2010. But this will require a firm commitment from both universities and housing providers to use collaborative contracts and shared services for back office support.

This focus on collective purchasing also raises the question of cross-sector collaboration. Could universities ever join forces with housing associations to drive down prices? This is already happening in the Midlands where housing providers Optima and Accord are combining demand with local councils, social enterprises and emergency services to get the best from the supply chain. More social landlords should consider joining forces with organisations beyond their immediate networks. It’s these external relationships that will bear the most fruit when it comes to finding fresh ways to cut costs.

Mike Haslin, deputy director of NWUPC will be discussing these issues at procurement event PfH Live, 12-14 June 2012, Manchester Central www.procurementforhousing.co.uk/pfhlive