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Managing suppliers: A Q&A guide for Resident Directors

We’re continuously working hard to maintain high standards across every corner of our business. Working with the right external suppliers is central to this, which is why we have dedicated processes and systems in place to make sure we continue to help residents feel safe and cared for in their homes.

In this Q&A article, we chat to Derren Chamberlain, Director of Supply Chain Operations, for a more in-depth, behind-the-scenes look at our approach to appointing and managing our 4,000 nationwide suppliers.

Tell us a bit about your role

Essentially, it’s my job to transform the way we operate our end-to-end supply chain. Due to the sheer scale of our organisation, rather than having non-standardised practices, we recognise there’s an opportunity to buy smarter.

Consolidating spending enables us to reduce costs for all. I’m here to make sure the contractors we use are delivering a quality service in relation to a number of different factors, such as response times, geographical coverage and out of hours support. This means we’re testing for multiple things and don’t always necessarily go with the lowest price.

Are Resident Directors aware of the liability placed upon them when appointing suppliers?

Some have a better understanding than others, especially if they come from a supply chain, procurement or property management background. However, as we look ahead to leasehold reform and other industry changes, it’s crucial that Resident Directors understand their legal and regulatory obligations.

We’re providing Resident Directors with clear guidance that shows them, ‘this is what you’re accountable for’, so they can walk into the role with open eyes. It’s not to scare anybody, but there are things they need to be aware of because, ultimately, if something went wrong, and in a worst-case scenario, actions may have to be justified in court. It’s our job to support Resident Directors and provide them with the guidance they need to meet their legal duties and responsibilities.

What support does FirstPort provide to Resident Directors in relation to supplier management?

We have a centralised procurement team that supports the wider business and, most importantly, our customers.

The key thing for us to remember is that it’s our customers’ money we are spending. Therefore, it’s important we always have a clear audit trail; we have to ensure there’s value for money and that we can evidence it. As part of this, it’s essential suppliers are being managed for the best value and quality performance, but most importantly is making sure they operate safely and comply with all relevant Health & Safety Regulations.

What does FirstPort’s supplier onboarding process involve?

All organisations conduct some form of due diligence when they are outsourcing activities to contractors or buying in materials from suppliers – it isn’t something that’s unique to us.

From our perspective, it involves checking for certain credentials, and depending on the product or service that’s being provided, the level of risk and amount of spending informs the level of due diligence. It’s typically the procurement team’s job to do this; they’re checking for things, such as, ‘have they got the right level of insurance cover?’

Our contractors must have £5million of Public Liability insurance and £5million Employer’s Liability insurance, as a minimum standard. And then, depending on the type of service, i.e. from a consultancy or surveyor, we also ask for Professional Indemnity insurance, and we ask to see copies of certificates on an annual basis.

There may be activities that require specific accreditation, for example, certification for any works that may pose an environmental risk. We investigate financial stability by carrying out credit checks and we look into how companies are structured and if they are a good fit for us in terms of their values. We’ll also check compliance with legislation such as the Data Protection Act 2018 and the Modern Slavery Act 2015. We are extremely thorough.

These checks form part of our front-end due diligence, which we conduct as seamlessly as possible. The timings largely depend on the suppliers and how quickly they can provide us with their certificates and other relevant information. What we ask for isn’t abnormal – I’ve been working in procurement for 25 years now, and the standards in the UK and internationally, are very similar.

We are working on behalf of our customers to keep them safe by making sure the suppliers we engage with operate to the highest standards. It’s our job in procurement to regularly check all of the details so that we’re always using qualified contractors.

What are the consequences of Resident Directors appointing suppliers that don’t meet our requirements?

There may be a preference for an RMC or RTM to use a local contractor or supplier, and that’s okay, providing they meet minimum standards. Over 50% of our supply chain is made up of small and medium enterprises (SMEs), micro-companies and sole traders. Big isn’t always best; we are finding the appropriate supply chain solutions to support our customers.

However, there are risks associated with using unapproved suppliers. Yes, they may be perceived to be cheaper. But they may not be qualified to do the work or insured to the right levels, and they may not have invested in their tools, equipment, staff or business. There’s no recourse, and the worst-case scenario is Resident Directors can face corporate manslaughter charges if something goes wrong. Unfortunately, there are examples of accidents, and even, fatal incidents out there.

How does FirstPort’s procurement team ensure the best value-for-money suppliers?

Due diligence is the first part of the process. In order for us to even consider a supplier, they have to meet the initial minimum standards we covered earlier, and then continue to meet these on an ongoing basis. We then go through a sorting process, where we assess certain providers and secure the best rate – e.g. service level agreements or response times. We’re constantly analysing the details through a combination of market testing and benchmarking, which is underpinned by our nine-step sourcing process.

All professional procurement teams work to these, with some using five to eight steps. By following the steps below, we are using an auditable process to manage the lifecycle of spending and effectively manage our suppliers:

  1. Define the business need – understand what is required project-by-project.
  2. Create category strategy – develop outline plan, covering areas including expected outcomes and specifications.
  3. Select suppliers – conduct supply chain and market analysis to identify suitable suppliers to tender for the project.
  4. Evaluation – assess all tenders based on areas, including quality and pricing.
  5. Negotiation – meet shortlisted suppliers and negotiate offers.
  6. Award – agree chosen suppliers and notify all suppliers of the final decision.
  7. Mobilisation – agree on a mobilisation plan with successful suppliers.
  8. Supplier exit – inform the outgoing supplier of tender result and issue notice in relation to the current agreement.
  9. Supplier performance management – communicate with new preferred suppliers and monitor activity on an ongoing basis.

How does FirstPort select its suppliers?

For facilities management services, such as cleaning or catering, we follow our nine-step sourcing process.

For Section 20 qualifying works, we must obtain a minimum of three quotes, which are evaluated against the agreed scope of works. We make a recommendation, but it’s the residents who ultimately make the final decision. Our recommendation may not always be the cheapest, but it may be more effective in relation to lead time, service level agreements or other key factors.

Does FirstPort’s list of suppliers ever change?

Yes, we’re regularly updating it. For instance, if we find a supplier’s not performing, even after working with them to help improve their performance, or if they aren’t meeting health and safety requirements, we will no longer work with them.

There are also suppliers on our system that have delivered one-off projects. My team constantly reviews our database, and if a supplier hasn’t been used for an extended period of time, and there aren’t any plans in place to work with them again, we’ll remove them as part of our ongoing list cleansing.

At the same time, we’re constantly adding new suppliers to the list from areas, including new innovation and disruptive tech. Overall, it’s made up of all sorts of businesses, from micro and small to medium businesses, to major organisations. All the time, we are making sure they’re a good fit for us.

Who can access the list?

Our Property and Development Managers have access to it and can search it in numerous ways, e.g. by location or type of service.

We’re currently refining the list to make it even easier for people to find exactly what they need. However, it’s worth noting here, that for certain work, such as fire risk assessments or particular asset compliance works, they must use our preferred suppliers, who have been heavily vetted. We don’t compromise on the use of these specialist contractors.

Is it possible for Resident Directors to recommend suppliers for the list?

Yes, the Resident Directors we work with can recommend suppliers to their Property and Development Managers. We regularly receive new supplier requests and try to be as pragmatic as possible.

We do coach prospective contractors as much as we can, but there are certain areas we will not and cannot compromise on. At the end of the day, if they are working with us on customers’ homes, the quality has got to be there, they must work safely, and they have to be providing value for money. Under no circumstances can corners be cut.

Where can Resident Directors get further support and advice about managing suppliers?

Our door is always open. The best way to contact us is via our two dedicated email addresses:

  1. For new supplier requests – email NewSupplierRequest@firstport.co.uk
  2. For supplier performance – email SupplierPerformance@firstport.co.uk

Over 70% of the enquiries we receive are turned around the same day by a named individual from within my team.
Our aim is to enable FirstPort to deliver value for money and protect our customers and Resident Directors from risk by working with an accredited supply chain. Ultimately, we’re here to guarantee our suppliers deliver a great service safely, every time and we continue to build upon these successful relationships.

Read our guide to Resident Directors’ duties and responsibilities

Want to know more? Just get in touch…

We understand the challenges property management creates for Resident Directors. With over 40 years experience, FirstPort works with over 1,000 resident managed developments across the UK, helping RTM and RMC Directors meet their management and legal obligations, all while delivering a great service for residents too.

To find out more, call us on 01582 393 756 or complete the form below and we’ll be in touch.