Our Appliances Framework partner AO Business discusses a highlight of Digital Housing Week: how we can create a ‘new normal’ for communities moving forward.

Piers French, Head of Supported Living at AO Business

 

The Covid-19 pandemic has forced huge changes into all our lives, including the mass migration to online shopping and an increasing reliance on digital communication. Many of these changes move the social housing sector forward and create opportunity within the uncertainty, but now we must plan for a ‘new normal.’

Online has been a lifeline for many people throughout lockdown, with demand for smartphones, tablets and laptops soaring. People now rely on technology to stay connected with family, friends and colleagues. Connectivity will be key to finding and retaining a new job as well as educating our children. To help prevent the most vulnerable becoming more disadvantaged we need to work together to create a new, fairer normal.

At AO, we understand the role our business should play in helping to create a better future for these communities. As a sector, we must put our heads together to search for innovative solutions to the complex challenges and changes raised by Covid-19.

In June, Digital Housing Week brought the social housing sector’s leading names together to debate and discuss the future of the communities we support. AO’s CEO and Founder John Roberts was joined by Jeremy Porteus, CEO of Housing LIN, and Sheron Carter, CEO of Habinteg, for a discussion about how the sector can use the pandemic as an opportunity to innovate. The event tackled tough questions about how organisations can offer the best ‘new normal’ for the sector’s most disadvantaged.

Jenny Osbourne, CEO of TPAS, the tenant engagement experts, began with an overview of the sector’s performance over the past months. The social housing sector was applauded for the way it has quickly mobilised to support vulnerable tenants. New communities – both online and physical – have sprung up to offer essential support and the opportunity to build more meaningful relationships with tenants was recognised. Sheron Carter, from Habinteg who specialise in accessible homes, drew on the rhetoric of Covid-19 as a great leveller, with lockdown forcing everybody in the UK to share the feeling of being trapped in their homes, which their disabled tenants experience daily.

Housing associations movement to online has largely been regarded as a positive step – scrutiny can be thorough online with focused and accountable meetings. However, moving communication to digital platforms can exclude many tenants. Online has proved itself as a huge equaliser – if you have access.

In a poll at the beginning of the Digital Housing Week seminar, 84% of attendees voted that social landlords should help their tenants by providing broadband and other technology. Many housing associations have understandably transitioned from call centres to online communication due to home working, but the sector needs to urgently address digital access before it moves full steam ahead.

The discussion introduced some key challenges which, although thrust into the spotlight by Covid-19, were already inherent in our society. John Roberts emphasised how the pandemic has exposed some particularly unpalatable truths – that those who have taken the highest risks in frontline roles throughout the crisis are ultimately the ones who are paid the least. In terms of education, John noted that while talent is evenly distributed, access and opportunity is not. With its rental business for appliances, AO are trying to build a model to tackle some of these discrepancies.

AO’s Supported Living team already recognise that those who need appliances and electricals the most, often pay the highest price. Households can spend around 47% more on the weekly shop because they can’t afford a fridge to store food. By making products more affordable and providing appliances to charities and housing associations, we hope we can encourage other organisations to work together on tackling the root causes of this inequality.

Across the business, we have found that the constraints of a global pandemic have challenged us to find innovative ways of working. Technology has been used in ways it would never have been used pre-Covid-19. At Digital Housing Week, John issued a call to arms for the housing sector to adopt a true mindset for change, challenging them to work in unison to create better communities for the future – where everyone can access what they need for a good quality of life.

The seminars at Digital Housing Week really reinforced the importance of looking through the lens of those less fortunate and rallying the social housing sector around a genuine mandate for change. AO Business have a role to play in this, which is why we have committed to changing the way people in social housing access appliances and electricals. We recognise that there is always more that we can do and we’re keen to share our expertise and resources throughout the sector.

 

For more information please contact piers.french@ao.com

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Driving innovation in construction and housing.

I was recently asked to present on the topic of ‘innovation in procurement’ which is a particularly ‘hot topic’ across the housing and construction sectors.  Unfortunately, procurement is rarely seen as a facilitator to innovation when considered in this context.

This is a subject close to my heart as I am a passionate advocate of procurements role in value creation in organisations.  This is often a challenging position to take in housing and construction as procurement is often a peripheral and transactional function and the sectors are renowned for a limited degree of innovative or disruptive change, often for very valid reasons.

Like many other areas of society though this position is under intense pressure – inequality, scarcity of housing, safety and compliance, skills amongst other things are putting increasing pressure on existing business models and in particular on housing and the construction sector.  This increasing pressure is often a catalyst for innovation and market disruption.

I could have looked at the brief and discussed ‘procuring through new innovations’ looking at many of the developments in how we complete our source to pay processes and our analytics.  Recent developments such as Amazon Business are clearly disrupting this space.

This, although very exciting, is not where I see the real value procurement can create.  The real value is in the ‘procurement of innovation’ – How did Apple’s supply chain and procurement change markets and production, how will 3D digital printing change traditional industries, what will happen as AI, Blockchain or battery storage develop.

Cultural Deficit

Housing and construction have never been synonymous with disruptive innovation and are traditionally slow and at best medium adopters of change.  This though is not meant as a negative statement when you begin to understand the reality of these sectors.

In the first instance both sectors are incredibly highly regulated.  Often, with life changing consequences, regulation comes with a high degree of perceived risk for individuals.  The tragedy at Grenfell clearly evidences this.

Alongside this I believe there is what I define as a ‘Cultural Deficit’.  This can manifest itself in many ways:

  • An inherent desire to transfer risk to supply chains when procuring goods and services;
  • Organisations that set targets that support the status quo;
  • A high degree of perceived cost and risk of transitioning to a new way of doing things – in particular in asset management and construction; and
  • The personal cost of failure – if this goes wrong will I lose my job or future career opportunities!

So, what we end up with are pockets of adoption but rarely is this early adoption.  A great example of this is the ‘digital transformation’ agenda across the sector.  We are embracing and adopting new digital business models but much, much later than many other industries.

 

Pent-up Value

Again, this slow adoption can be acceptable in many cases.  But, I believe that some things are changing that may require our sector to take a different view.  The macro and micro economic and social situation that is prevalent across our sectors and increasing competition means that innovation will be driven by need.

Our sectors are actually doing an immense amount of creative and innovative things such as the use of financial investment tools to build and maintain properties, smart homes, health and social care technology, digital inclusion, Internet of Things, modern methods of construction, social value and social enterprise.

We can see as a sector we have a huge amount of ‘Pent-up Value’ that is being marginally exploited but could have significant impact.  What is challenging though is that amongst all of this, some key areas around traditional supply chains in development, repairs and capital expenditure are lacking any disruptive innovation on any scale.

The structure of the construction sector is highly fragmented with multiple tiers of supply chain and a high degree of sub-contracting.  This fragmentation and transactional cost drives huge inefficiencies and does not support scalable innovation easily.

Does Procurement have a role to play?

If I link this back to procurement, I think we have an interesting role to play.  This role though requires a future view of what procurement should be doing in an organisation.  It also asks the question ’do we have the right skill sets to support the evolution of procurement creating value through innovation?’  People and culture will be critical for our future success.

Our traditional procurement model in housing and construction supports typically, a centralised function with targets set around compliance, spend under management and savings and all supported by stringent process.  If I take asset management in housing as an example, procurements involvement only occurs long after any real value creation – often being engaged just to complete and police a sourcing exercise.

What though if our sectors adopted an alternative model where procurement was characterised differently.

Skills – Our recruitment and development processes focussed on skills much wider than EU procurement knowledge such as, stakeholder management, analytics, consultative expertise, commercial acumen, product development and innovation, enterprise, and networking.

Structure – We developed our teams to work in integrated procurement groups that worked in the business rather than on the business.  These groups critically worked throughout the contract lifecycle rather than just during the sourcing phase of activities -becoming an integral owner of value creation through category management, strategic sourcing, analytics, contract management, supplier relationship and performance management, risk management, product development and so on.

Measurement – Although traditional key performance indicators will still be relevant in procurement we must develop these and provide ‘weight’ to alternative measures of success.  Things such as time to market, ‘end user’ experience and satisfaction, product success, RoI, and a product or service to price and quality ratios.

Procurement can become an integral part of a functions success.  Ownership of championing the function, change management, horizon scanning, investment and funding because they are clearly integrated and aligned to the business goals.

A final word….

Who knows what we could achieve in construction and housing if we release the ‘pent-up’ value.  Maybe we could have properties that were fully enabled with sensors and repairs work was reduced significantly due to improved planned maintenance or we may be able to develop financial deals for new build at cost and builders would model in predictive maintenance costs for the lifetime of the property driving velocity into building new homes.

What is clear, is that for procurement to drive value through innovation, we need the right leadership, skills and desire.  With this I truly believe the housing and construction sector are on a precipice of a fantastic opportunity.

 

Steve Malone, MD at PfH

Social housing providers face a difficult task when it comes to deciding what products are needed in their properties. Issues around compliance and safety increasingly need to be balanced with cost and efficiency, particularly in bathroom product procurement.