The ever-increasing criticality of a purposeful procurement function within the social housing sector
Procurement in the social housing sector currently faces several challenges. A significant backlog of work caused by the pandemic, volatile market conditions causing a shortage of labour and materials, high inflation combined with increased borrowing costs, ongoing high energy costs, and higher spending on repairs and maintenance which continue to impact on providers’ operating costs. In addition to this, the sector will have to adapt to the new Procurement Act which comes into play in October 2024. This will allow for a more commercial approach and negotiation phase to commence, and flexibility to design procurement processes that meet their organisation’s exact needs and drive innovation.
The rent cap has meant housing associations now have to decide what to spend their limited resources on; so anyone who can help balance savings and efficiencies with service delivery and quality, whilst also delivering an added value offering, will be integral to the success of the organisation.
Even though market conditions are challenging, the procurement function has a real opportunity to bring some fresh ideas to the executive committee. These include:
- Helping to identify wider strategic opportunities for efficiencies and thus shaping corporate direction.
- Being a key contributor in driving the ESG agenda – a 2023 Accenture report on ‘Supply Chain Sustainability’ outlined that 60% of all carbon emissions globally are derived from supply chain.
- Keeping a keen eye on the supplier market, identifying innovation opportunities, driving value and service improvement, managing risk and diversifying the supply base.
- Social Value – the sector is already well attuned to the ideas that underpin social value, the new Procurement Act represents opportunities that housing associations are well-positioned to take advantage of to enhance the lives of their residents and surrounding communities.
Procurement has gone through a rapid and exciting transformation over the last twenty years. It has evolved from process management and cost savings to a dynamic, strategic business function that plays a pivotal role in organisational growth. However, many social housing organisations are still operating reactively and tactically to the detriment of the organisation and ultimately resident service provision.
While cost savings and service delivery remain key deliverables, procurement leaders are now increasingly responsible for broader commercial decisions, driving strategic change, mitigating risk and leading on the ESG agenda. This widening of the role has broadened the skill set of the procurement professional significantly.
Procurement leaders need to be aligned with the broader corporate objectives to ensure they deliver optimal innovation and value throughout the supply chain. Soft skills have become as important as functional skills, developing procurement professionals into commercially minded business leaders who play a key role in revenue uplift while reducing costs and ensuring Value for Money.
Through our networks and research at Berwick Partners, we are experiencing increasing demand for this new breed of procurement leader across the housing association sector. I’ve worked closely with a number of housing associations including Anchor, Aster Group and Bromford Group helping them to upskill their procurement leaders and source new procurement talent.
If you wish to further discuss any of the topics covered in the article or have a conversation about increasing the procurement capability within your organisation, then please contact me at firstname.lastname@example.org
If you would like to broaden your procurement leaders’ skills or source new procurement talent, please contact me at Richard.email@example.com