Aggregation of materials purchasing by housing associations for both capital projects and repair and maintenance work may eventually change the timber supply chain to this sector. At present, its effects are concentrated amongst the collective procurement agreements being entered into by builders merchants with procurement groups and particularly with Procurement for Housing (PfH), which represents 560 organisations in the social housing provision sector.
PfH was formed in 2004 to collectivise procurement, primarily for the social housing sector, in line with the government’s efficiency drive in the public sector. Its founders included the National Housing Federation and the Chartered Institute of Housing. A membership organisation, PfH’s constituency currently comprises 85% housing associations; 10% arm’s length management organisations, and 5% local authorities.
“Local authority membership is a key growth sector,” said PfH director Julie Craig. “Since we introduced a collective purchasing card scheme in May, we have seen significant growth in our local authority coverage.
“The three central tenets of our existence are to deliver value for money in social housing procurement; to improve and standardise processes, thus saving administration costs, and to make it easier for companies to do business with the social housing sector,” said Ms Craig. “Our advisory product groups, comprising specialists with purchasing responsibilities, helped to define supply contract requirements. Contracts were agreed with suppliers in a range of other fields before we more recently turned our attention to buildings and materials for maintenance.”
Purchasing power
PfH already represents social housing sector purchasing power totalling around £70m, with £20m of this covering materials for building, repair and maintenance. “Our aim is certainly to pass the £100m mark. The increasing pressure for public sector cost efficiency means that more organisations will seek out the reduced unit prices and consolidated administration costs that our purchasing systems provide,” said Julie Craig.
“The Decent Homes Standard and consequent capital projects promote part of our interest in collective purchasing of building materials like timber. Providing products and services for planned and responsive repairs is the other half of the equation. Our Capital Works card identifies operatives purchasing on behalf of our members and ensures that PfH’s negotiated price is allotted to the invoice. Our back-office reporting also provides a wealth of management information for members, helping them to maximise opportunities for efficiency.”
Timber purchasing is currently routed through builders merchants, except for windows and doors, which are undergoing separate contract negotiations. Companies that have signed purchasing price and service agreements with PfH, following an EU-compliant tendering procedure, are the Grafton Group, Jewsons, the 1,000-strong membership of UNIMER, Burdens, and Plumbing Trade Supplies.
Timber suppliers
In the longer term, Julie Craig does not rule out establishing contracts more directly with timber suppliers, with the builders merchant fulfilling a logistical role as a distribution channel. “The next stage in our timber procurement activities will look at cost efficiencies in purchasing engineered timber products,” she said. “We will also have a role to play in aggregating contracts to supply off-site manufactured timber-frame housing.
“Builders merchants will still form a key part of our processes since their local distribution capabilities are key to PfH members. Our innovative agreement with UNIMER shows we are able to create purchasing efficiencies at a national scale whilst fulfilling sustainability criteria by supporting smaller businesses. We feel the efficiency and sustainability agendas can be mutually compatible.”
The baseline proof of timber provenance for PfH is “legal and sustainable” and it accepts FSC certification. “We need materials that are fit for purpose and deliver value back into the social housing sector across the board. Price represents around 50% of the purchasing decision, the remainder is governed by our members’ qualitative criteria. These can include quality, responsiveness, service levels and environmental factors. For example, transport minimisation is now registering on everyone’s radar, and may play a larger part in future contracts,” said Ms Craig.
In conclusion, Julie Craig sees an opportunity-laden future for timber and wood product suppliers: “Management in the timber sector should see working with PfH as a possible route to growth. Manufacturers in many sectors have worked with us to establish procurement deals and have subsequently seen their businesses expand. With sustainable building driving demand for timber, the same benefit could be yours.”
