leadership
viability
customers
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support
PROCUREMENT
STRATEGY
2016 - 2020
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mission
vision
values
Homes people choose
Pride Passion Respect Innovation Teamwork
Deliver quality homes, build communities & improve lives
MA CD O C LD NA
In delivering our vision, we expect to achieve a number of key outcomes:
OURT
Provide a choice of good quality homes and services. Deliver excellent services tailored to the needs of individual residents, with additional support for those who need it. Support the development of vibrant, sustainable communities. Continue to provide new homes, working within financial constraints.
corporate objectives From the Corporate Strategy 2016-2020
The key corporate objectives we are seeking to contribute towards in this strategy are: • Achieve sustainable growth from the delivery of new homes and new forms of home ownership • Be an excellent landlord, deliver efficient, excellent core services and listen to the views of our residents • Maintain financial strength and resilience • Deliver efficiency through value for money through innovation in all we do to maximise financial capacity for reinvestment in services and new homes. • Continue to provide social value throughout the business
Pride in everything we do Passion for excellent customer services Respect for everyone Innovation for improvement and value for money Teamwork for results
Over the term covered by the strategy, we will have an increased focus on identifying real term efficiencies. We will, however, continue to keep residents at the heart of our business, and will
I
ensure that we maintain high levels of quality and
am pleased to introduce Town & Country’s new
performance, and where possible, engage our
Procurement Strategy. In April we published
customers to ensure that any changes to service
our new Corporate Strategy; this document
provision are based on a balanced decision making
sets out how we will bring our procurement
process.
approach in line with the strategy to work towards Town & Country’s corporate objectives.
As a social landlord we recognise that our contracts provide a number of opportunities for additional
Our sector is faced with a challenging landscape
‘social value’ benefits to be provided to our
over the next five years. In particular the need for
communities. We will continue to work towards
efficient management of our finances is paramount.
these ambitions with our suppliers, with a particular
With our contractors and other suppliers making up
focus on supporting those residents in our homes
a significant part of our organisation’s expenditure,
that are the most vulnerable.
and providing an integral part of our service delivery model, strong procurement and contract management will play an important role in achieving
Bob Heapy
our strategic objectives.
Chief Executive
Introduction
outlook Our sector is entering a challenging period. We are faced with falling expenditure on public services, In recent years, Town & Country has reinvigorated
welfare reforms, constraints on social rents and
its approach to procurement. In 2013 we created a
increased pressure generally on public services.
specialist procurement function within the business to
In response, our Corporate Strategy sets out a
improve processes and embed specialist knowledge.
number of key objectives which are relevant to
Within that time, the business has significantly
procurement – in particular to retain the Group’s
improved its approach towards the procurement of
continued viability through financial resilience,
contracts and services; resulting in improved value, a
innovation and efficiency.
greater focus on outcomes and quality. Town & Country is committed to introducing a Town & Country has a strong approach to managing
procurement approach that will allow us to deliver
procurement. This approach gives us certainty when
annual ‘real term’ efficiency savings. In doing
managing the risks associated with procurement,
so we recognise the potential impact that such
and consistency in our approach to value for money.
savings and the associated changes could have on
In recent years, the efficiencies that can be delivered
service delivery; we will continue to seek a balance
by strong procurement have been increasingly
between the need for efficiencies and our other core
highlighted, with our procurement contributing
objectives – including keeping residents at the heart
towards the delivery of £1.2m of efficiency savings in
of our business and supporting the most vulnerable
2014-15 and £1.03m in 2015-16.
in our homes.
Therefore, our aims for procurement over the
We are also aware of the key risks associated with
next five years are to:
our sector and the markets from which we buy our
• Have a greater focus on cost efficiency and
key services. Throughout, we are committed to
transformation, both leading into, and during,
ensuring that our procurement:
the procurement process.
• Contributes towards our objectives relating to
• As a minimum, we will seek to maintain the cost of our contracts at their current level (no inflation). • We recognise that compromises will need to be made in order to achieve the required level of
customer satisfaction. • Supports our Asset Management and Growth Strategies. • Protects our residents, staff and the public
cost efficiency. Service levels and specifications
from any risks associated with contractors;
may need to be redesigned or reduced.
particularly in relation to Health & Safety.
• Where this applies, we will consult with customers and other key stakeholders and make a balanced decision. We will take into
• Takes a proportionate approach to managing the risk of contractor insolvency. • Allows the business to maintain high corporate
account the potential efficiencies along with the
and ethical standards and comply with our
potential dis-benefits associated with making
statutory obligations.
those changes.
quality services. We will focus on identifying
regulation & legislation
savings in an intelligent way and we will cut out
Procurement by ‘public bodies’ includes registered
unnecessary costs, maintaining those areas
providers such as Town & Country. We are obliged
which are most important to our customers.
to comply with the guidance set out in the Public
• We will continue to focus on delivering high
• We will update our Procurement Policy to
Contracts Regulations (PCR) 2015 for any contracts
formalise our approach to delivering social
valued above certain threshold amounts. We also
value through procurement; maximising value
have duties which apply to any procurement in
opportunities and building upon the excellent
excess of £25,000. We recognise our commitments
progress that we have already made.
under the PCR and will continue to ensure that our policies and procedures are compliant.
Our Procurement Strategy is based around four key themes: Cost efficiency - Continuous improvement - Customers - Social value
6 Themes & objectives The procurement Strategy has been organised around four themes. These themes, their objectives and measures relating to each one are:
1
o
cost efficiency
ctive e j b
Reduce the cost of our contracts through procurement. As a minimum, seek to keep the costs of contracts level with existing contracts.
measures & targets 1. Deliver the Group’s Annual Procurement Plan, which sets out our efficiency targets Target: as a minimum, no cost increase in cash terms. 2. All preferred suppliers / supplier lists are to be reviewed annually by Head of Service and any suppliers used for more than five years to be subject to a full procurement exercise. Target: all relevant suppliers identified to be re-procured. 3. Support the expansion of the Construction Management model to deliver all sites of less than 10 homes subject to tender. Target: 5% saving on design & build cost. 4. Continue to develop relationships with partners and investigate opportunities for collaboration (included in annual Procurement Plan)
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2
o
continuous improvement
ctive e j b
Over the life of key contracts, further reduce costs or improve the outturns delivered.
measures & targets 1. Develop and facilitate an annual benefits realisation review for key contracts Target: plan agreed annually by EMT. 2. Conduct an annual rolling review of contracts to identify potential efficiencies and monitor costs on an ongoing basis. Target: Annual report to Executive Management Team (EMT) setting out potential Value for money (VFM) opportunities from key contracts. All contracts to be reviewed by the end of the strategy term. 3. Develop a ‘Sourcing & Market Engagement’ plan to identify potential supply chain efficiencies and better understand contractor opportunities. Target: sign-off by EMT and then annual delivery. 4. Review the potential for Purchase to Pay systems and other innovation to generate efficiencies. Target: report to EMT setting out further recommendations.
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3
o
customers
ctive e j b
Ensure that procurement activity contributes towards Town & Country objective of being an excellent landlord.
measures & targets 1. Develop an approach to resident engagement for key procurement activities. Target: residents to be consulted for all major procurement projects. 2. Specifications for all major procurement projects to be reviewed by Head of Service and Procurement considering lessons learned and potential service improvements. Target:100% of specifications for major procurements reviewed. 3. All customer facing suppliers to have signed up to Town & Country Code of Conduct. Target: all major suppliers by end 2016-17, all suppliers by 2017-18.
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4
ctive e j b
Maximise the potential social value outturns from procurement activity.
o
o
social value
ctive e j b
Ensure that procurement activity contributes towards Town & Country’s objective of supporting our most vulnerable residents.
measures & targets 1. Update the Procurement Policy & associated procedures to formalise the Group’s approach to delivering social value through procurement. Target: sign-off updated Procurement Policy & Procurement Social Value Plan by March 2017. 2. Conduct an annual review of supplier payments and report on performance. Target: all undisputed payments to be made within 30 days. 3. Improve engagement with suppliers that are either local (within Kent) and / or of an SME* nature. Include local SME’s in tenders where appropriate. Target: year 1 benchmark report and thereafter target set by EMT. *SME Small and medium-sized enterprises
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Practical Procurement As part of our new approach to procurement, we have developed our ‘Practical Procurement’ approach. The aim of this is to make our procurement objectives clear and accessible to staff at all levels within our organisation. The aim of the principles are to focus staff on cost efficiency, quality and embedding procurement excellence within the business. These principles are broken into the three main elements of procurement. 1. tendering 2. contract management 3. day-to-day purchasing
11 operational priorities In addition to our core objectives for procurement, there are a number of underlying areas which need to be continually monitored and maintained to ensure that we manage our procurement effectively. Whilst these are ‘business as usual’ tasks, they form the foundation of our procurement activity, underpin all of our processes and ensure that we do not allow unnecessary risks to be introduced into the business.
In order to do this we will maintain a register of operational priorities. The ‘top ten’ areas that we will monitor are:
1. Value for money
All contracts must deliver the required levels of efficiency and value for money.
2. Public Contracts Regulations
We will seek to prevent or deal appropriately with challenges under the PCR 2015 to prevent delays, legal issues and/or costs. We will comply with our obligations under the Bribery Act, Modern Slavery Act and other relevant legislation.
3. Contracts
Sound contracts must be in place for major suppliers which offer sufficient protection against issues.
4. Customer satisfaction
All suppliers should contribute positively towards improved satisfaction levels.
5. Health & safety
Suppliers must protect the safety of our customers, staff and the public; this includes safeguarding and compliance with statutory requirements.
6. Finances
We will monitor our spend against tendered prices. We maintain an awareness of, and mitigate against, the risk of supplier insolvency.
7. Performance
Suppliers must perform to the required standards. Standards are to be clearly set out from the outset.
8. Internal compliance
We will manage compliance with internal policies through training and communication. We will further develop and embed our practical procurement approach.
9. Reputation
We will not enter into contracts with suppliers that are guilty of illegal or inappropriate behaviour such as bribery, collusion, tax evasion, modern slavery, etc.
10. Equality & diversity
We expect suppliers to be compliant with their obligations and to make suitable adjustments when delivering the service to our customers.
leadership
viability
customers
growth
support
Monson House Monson Way Tunbridge Wells Kent TN1 1LQ 01892 501480 www.tchg.org.uk