Published September 2005 in Local Government News
As previously reported in LGN, the Fusion 21 initiative has led to increased savings in terms of installing central heating for local authorities. In fact, other councils are so keen to capitalise on its success, that 'The Alliance' has been formed to offer support and technical advice. John Haven discovers how this radical approach to procurement is about to be shared up and down the country.
Merseyside housing associations have made major savings on their repairs and maintenance bills thanks to Fusion 21, the pioneering procurement partnership set up just two years ago. However, this is only part of the story.
Through its construction skills training scheme, Fusion 21 has helped over 200 unemployed people into permanent construction jobs. It has also won plaudits from the ODPM and landed four national awards.
As the partnership enters a new era, there are now plans to share the radical procurement approach with social housing providers up and down the country.
It's a bold ambition but one which is already taking shape thanks to the Fusion 21 Alliance, a coalition of the experts who helped establish Fusion 21 and applied cutting edge techniques in the development of the original procurement model.
Creation of the Alliance is a neat solution for Fusion 21, which had been facing an increasing volume of inquiries from RSLs keen to replicate the model and generate the cost savings and other efficiency benefits in order to meet the Gershon review targets.
The Alliance is made up of supply chain specialists Valueworks, cost control and project management experts EC Harris and economists AMION Consulting (it is managed by a steering group of representatives from Fusion 21 and the three companies)
The Fusion 21 procurement model itself is simple, and quite logical, a virtuous circle of supply and demand which increases the supply of labour to meet demand and keep long term construction prices down. At the same time it harnesses demand for construction materials and optimising the supply chain for these materials. Inevitably, it's the complexities of the supply chain model that is hard to grasp - and attracts the most interest because it is where the real savings lie.
The supply chain approach highly innovative because it identifies four key stages of the supply chain process; analysis (finding the savings), sourcing (getting the savings), procurement (keeping the savings), and strategic cost management (increasing the savings).
It's the step between 'keeping' and 'increasing' savings where the technology platform really comes in to its own because it complete control of product costs and the ability to undertake 'true' strategic cost management of the sort usually only undertaken in sectors such as the automotive industry.
As a partnership of housing associations, Fusion 21 currently uses the technology to procure construction materials such as the bathrooms, kitchens, central heating and windows needed to upgrade properties and undertake refurbishment.
It has also recently developed a framework for gas servicing and maintenance which has now been adopted by six social housing providers.
The same principles and technology could equally be applied to other products - responsive repairs, group maintenance and even complete new builds are already being considered.
As Fusion 21 explores potential for new developments on Merseyside, the sheer amount of interest from other SHPs - and opportunities for adapting the Fusion 21 model, means the Alliance team is likely to be busy long after the Decent Homes and efficiency deadlines have passed.
