Embracing due diligence is not just a responsibility, but also an opportunity.

Posted: 27th June 2023 Rebecca How, Junior Consultant

Supply chains play a pivotal role in the success and reputation of social housing landlords. Your complex web of service suppliers and development contractors can pose significant risks, affecting your strategic and operational capacity and therefore directly impacting your customers’ experience.

Social landlords that fail to exercise due diligence on their supply chains face a multitude of risks, from the inconvenience of delayed delivery at one end to the loss of considerable sums of money at the other. To safeguard against potential risk, sufficient, proportionate and proactive due diligence is crucial as both an initial and ongoing exercise throughout the relationship combined with wider appropriate business continuity planning.

The importance of due diligence

The importance of due diligence on supply chains cannot be overstated in today’s supply chain and current operating environment. The Insolvency Service announced that the number of companies in an insolvent position has increased by 40% compared to May 2022[1]. With thorough due diligence, social landlords can identify red flags that pose risks to the continuity and integrity of services to customers.

Inside Housing recently wrote a timely piece on how the sector is coping with the impacts of the current economic environment on construction contractors[2]. The article shares examples of recent contractor collapses and highlights yet another issue for social landlords to consider as they try to fulfil their role and makes some helpful suggestions about being more diligent.

The process of due diligence itself can involve a number of supplier checks that are seen as straightforward to undertake, with a range of power data analytic tools available to use. However, it is crucial that any data analysis provide meaningful evaluation, identifies a clear set of implications, and derives actionable insights that drive effective decision-making based on the data.

What can Altair do to help?

At Altair, we are working with a number of social housing landlords who are concerned about the uncertainty of their strategic suppliers’ overall financial and risk position, as well as the overall stability of the sector. In response, we have developed an in-house structured methodology for undertaking both thorough and meaningful due diligence to produce a comprehensive picture of a supplier(s) and their position in the overall market. The key pillars of our approach include:

  • Business Intelligence, analysing and interpreting data on business operations, both operationally and strategically, to provide an evaluation of the suppliers’ current and future position.
  • Financial Performance, reviewing and assessing both the current and predicted financial health and stability of a supplier and associated entities.
  • Risk Analysis, identifying and evaluating the risks from various sources, such as financial, operational, legal, market and reputational factors, to provides clear indications that may affect outcome.
  • Sectoral Analysis, understanding the dynamics, trends and competitive landscape with a focus on the key drivers, opportunities and challenges, to provide context and direct comparison with an individual supplier.
  • Commercial Insight, comprehensive knowledge of the market and business environment to identify opportunities and make informed strategic decisions.

All of this is applied and scrutinised with our considerable experience in the sector, in consultation with our clients, to ensure that this due diligence is proportionate and risk based on overall assessment of strategic risk presented to an organisation. However, we recommend that social landlords thoroughly assess the current heightened risk and position of their development contracts and suppliers in the current situation.

We believe embracing due diligence is not just a responsibility, but also an opportunity for social landlords. It allows them to create a positive social and environmental impact, secure long-term success, and enhance transparency, credibility and trust throughout the supply chain, from contract to customer.

For further information on how Altair can assist you, please contact:

Spencer Hill, Director of Commercial Services on Spencer.Hill@altairltd.co.uk

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