Approach to Value for Money. Ginny Warr Head of Procurement

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1 Approach to Value for Money Ginny Warr Head of Procurement

2 Background to Sovereign Pre 2011 Sovereign Housing Group Ltd Sovereign Housing Association Ltd Twynham Housing Association Ltd The Vale Housing Association Ltd Kingfisher Housing Association Ltd Post 2011 Sovereign Housing Association Ltd (Oct 2011)

3 Where we operate

4 Our statistics Approx 37,000 properties 86,000 residents Turnover 224m 2014/15 Approx 1,000 employees Asset Value 5bn Surplus 35m 2014/15 Last 3 years growth: - built 3,100 - acquired 1,500

5 Our Strategic Objectives To grow the business in a sustainable manner through development, stock transfer and diversification To provide great places to live and encourage strong communities To maintain a strong and effective organisation To develop staff to succeed through support, investment and reward

6 Getting the foundations right

7 Achievement headlines 530 residents supported towards employment and training - leading to 66 securing jobs and 289 taking up training or voluntary work 80% employee engagement rating 20m over 4 years against Value for Money strategy 1,113 new homes built in 2013/ homes per year planned for next 4 years 50,000 homes by 2018

8 Our Approach Our Philosophy a social housing business with a commercial approach to how it operates. Our overarching VfM objective is to Maximise our capacity and better utilise our assets to meet the needs of existing and future residents

9 VfM Framework We have developed a framework which we believe is critical to the success of embedding VfM in a business; Total commitment from main board Ownership from strategic leaders and action plans linked to the Strategic Plan Accountability throughout our operations to ensure that we involve residents and other partners to ensure that our homes and services are aligned to their expectations and support the continued growth of our communities Measurement VfM is considered in all aspects of our delivery, measured via performance dashboards, management accounts, NPV Asset Model.

10 The Procurement Team We help people spend money in a way that delivers value for money, mitigates risk and enables the delivery of operational and strategic business objectives

11 Driving Value Procurement is one of the cornerstones of our VfM framework. The investment is significant however the benefits are high. In the first year of operation the procurement team delivered savings of 3.8m and 3.4 in the second year We have optimised our suppliers from 3,579 in May 2012 to our current base of 1,200 We have also delivered Supplier segmentation Supplier Accreditation and performance programme for suppliers Annual supplier conference SME supplier programme Spend Analysis Savings model for benefits tracking opportunity v realised

12 Value for Money

13 Supplier Segmentation Support and Maintenance / Disposal Costs SME

14 Our suppliers We ensure that our suppliers are fit for purpose We carry out financial and due diligence checks at the start of their relationship and throughout the supplier lifecycle We monitor supplier delivery performance and contract compliance.

15 We recognise suppliers that Employ locally Offer active apprenticeship schemes Actively support protecting the environment Eliminate waste from their business Share similar values and behaviors Embrace inclusion and diversity Companies who demonstrate competence against these areas are recognised through the procurement process

16 Why we involve our residents Sovereign Staff Our residents When? When are the goods/services required? Who? What? Who is the best supplier to provide the goods/services? What is the full description of the goods or services? How are we going to buy the goods/services? How? Where? For what locations are the goods/services required?

17 Sustaining Value Frustration Zone Irritation Zone Target State Current State

18 The VfM challenge Problem statement Business for responsive repair materials was ready for retendering costs were high and efficiency was low. Traditional approach would be to tender the list of historical materials to establish a new 4 year contract with the most competitive supplier We took a fresh look using our total life cycle cost model to establish a more suitable brief for the project.

19 Total Cost of Ownership (TCO) Outright Purchase During the year Sovereign have reviewed several large procurement contracts Cost generating savings of circa 3.7m Insert savings pie from last financial year showing business areas Additional costs Logistics Training Support Billing and back office Installation Disposal

20 Putting the model into practice Case study responsive repair materials annual spend 4M To establish a service delivery model that enabled Sovereign to maximise the operational efficiency and cost effectiveness of its response maintenance service through the following deliverables:- Approach Agree standard core products by trade Electronic ordering / invoicing established Maximise first time fix capability through use of on-board van stock Non-van stock items delivered to required location Reduce the van footprint, fuel consumption & running costs

21 The outcome

22 Current VfM Projects Current Initiatives enabled by Procurement Vodafone voice and data tariffs Document management Follow me printing IT hosting

23 Conclusion VfM thinking needs to be embedded in everything you do Commitment from the top of the organisation is critical Good quality data is key to making well informed timely decisions VfM is business as usual

24 I am happy to take any questions? October 2012