It manages two 300-bed Backpacker Hostels and a third site is currently being refurbished to provide 70 self-contained units of long-term accommodation for students and keyworkers.
Questions answered by William Tibble, Financial Controller, Harvestglen Properties Ltd
Why did you join IHP?
I had come across IHP when I worked for a residential child care establishment based in Somerset. Although, when we started Harvestglen, we had good contacts with suppliers we had used at other companies we were also aware that the company was completely new with no trading history and no name within the Backpacker sector. Many suppliers were keen to work with us but it was difficult to get decent terms with them as we had no evidence of the volume of business we expected to do with the supplier.
We therefore joined IHP in order to leverage their purchasing power to the suppliers that we wanted accounts with. By doing this we were able to agree much better pricing from day one which was vital to the cash flow of the company during the early years of the business.
What savings do you expect to make annually?
This is difficult to be precise about as, although our emphasis is getting the best deals, we don’t keep track of what we are saving beyond measuring key performance indicators and management accounts. I would say a conservative estimate would be at least £15,000 per year based on my knowledge of IHP prices compared to non IHP. It is not unusual to see discounts of between 30% - 50% appear once items are added to our IHP contract.
What benefits has IHP generated for your organisation?
Obviously the biggest benefit has been to bottom line profitability. Over the last 5 years we have consistently been able to reduce costs year on year within key areas of the business – not by cutting quality or service but simply by getting a better deal on our overheads and cost of sales.
We are now in the process of starting with IHP’s Marketplace and we expect this to introduce much better procurement policies for our company to ensure that the best products and prices are always sought before committing budget.
How has IHP helped your organisation maximise the savings available to you?
IHP has always been extremely helpful and proactive. When asked to either source new products or assist in getting a better price on existing ones they act very quickly and ensure that the supplier will offer the best price. Unlike other consortiums I have worked with I have always felt that IHP was acting in our best interest rather than the suppliers or their own.
How has IHP delivered effective contract management on behalf of your organisation?
Simply by being proactive and by getting suppliers to react quickly to our requests
Tell us about a recent project that IHP has helped you with.
We recently reviewed all our contracts amongst them a contract for dry and frozen food. We were using a major supplier but another had been promising better prices. Our existing supplier won the contract simply because we were able to work with IHP and the supplier to re negotiate the prices. The assistance of our IHP account manager was invaluable because they were able to work with the supplier and review the prices in a way favourable to our company.
What are the most useful elements of IHP’s dedicated client service?
The IHP account manager is the most useful element of the service. As stated earlier I have always felt that the account manager is working with our best interests in mind.
What level of service has your IHP suppliers provided for you and your organisation? (Please give examples where possible.)
The level of service extends beyond pricing. For example our food supplier also designs menus for us and assists in calculating margins. Our cleaning material supplier also provides COSH training and Health & Safety materials. All our IHP suppliers provide some services, free, above and beyond the products that we purchase from them. They are also good at passing on their own knowledge and assisting us in improving our own processes.
How has the new Central Billing system helped to streamline your purchasing?
It has assisted greatly in keeping our suppliers to a core minimum whilst maintaining low prices. We used to spend considerable time sourcing products from numerous suppliers simply to save a few pounds. By using IHP we have cut our suppliers down to the bare essentials whilst maintaining our confidence that the best prices are being offered. This saves considerable time.
It also simplifies the account settlement process and the time spent on the purchase ledger function. Both ourselves and our suppliers know that accounts will be settled on time and queries sorted out promptly. This means we can concentrate on profit generating activities without getting bogged down in paperwork and disputes.
What challenges did you face when setting up central billing?
None. It is a very simple process.
How will your residents/patients benefit from the savings you make?
By keeping control of our costs we are able to limit any price increase to our customers. This has been clearly illustrated this year as we have been able to absorb the VAT increase without any negative impact on our bottom line simply by gaining more savings on our purchases.
What would you say to other healthcare providers that are considering becoming a Member of IHP?
The membership fee is trifling compared to the potential savings but remember that these savings can only be maximised by working with the suppliers and IHP. Prices offered by a supplier through IHP are not set in stone so use IHP to present your interests to the supplier to get even more savings.