Manufacturing Principles Can Help Reduce Lost Housing Years
Says Roy Coldwell, Operations Director of business improvement specialists Picme Limited.
Figures from the Council of Mortgage Lenders (CML) have revealed that the number of UK homes repossessed in the first quarter of this year was 12,800 – a 50% increase on the same period last year. As more and more people are forced out of their own homes through redundancy and subsequent mortgage payment defaults, the strain on Britain’s local authorities and housing associations is becoming ever greater. The CML predicts that by the end of the year, the total number of repossessions could reach 75,000. Meanwhile the number of vacant local council and housing association homes in England in 2008 was reportedly close to 79,000.
Clearly this indicates that there is enough social housing to address this issue, so why are there so many vacant properties? The average amount of time a home of this type remains empty is 40.2 days. Assuming that a small housing association has just 10,000 properties on its books and that 3% of these are vacant at any one time, this equates to 12,060 days, or 33 lost housing years.
In order to improve turnaround times, a number of housing associations and local authorities are now looking to the manufacturing industry for inspiration. They have found that, the removal of waste throughout every element of the process can cut the number of lost housing years dramatically. The system operates on the same principle as a manufacturing supply chain. Handover times from old tenant to new tenant can be reduced and the process more streamlined using the Single Minute Exchange of Dies (SMED) principle.
This process, used in the manufacturing industry for decades, reduces production batch sizes and improves the flow of the product from manufacturer to end user through the elimination of ‘waste’ or any step or process which does not add value to the overall operation. Obviously the ‘Single Minute’ is not literal, but the same process is easily transferable to the management of social housing. In reducing the number of processing steps to those that are necessary to produce a positive result and processing smaller numbers of property at one time, organisations have seen a substantial reduction in handover times from tenant to tenant.
Lean processes such as SMED challenge the ways things are traditionally done. For example, if a house is empty because it is awaiting maintenance work, then if the work is not critical (e.g. guttering, a new internal door, decoration etc.) the tenants could move into the house and the maintenance could be scheduled for a later date. Similarly if a house is empty and a new tenant has not yet been allocated, maintenance work could begin early.
Another method of reducing necessary maintenance time (and therefore the handover between tenants) could be lie in incentivisation. Existing tenants could receive a bonus payment if the property they are about to leave has been kept in a good condition. New tenants could receive higher decorating allowances so that they can decorate the property to their own taste. This would give them a sense of ‘ownership’ and suggests that they would be more likely to treat the property with respect. Both of these initiatives will help to improve the speed of flow and hence reduce lost housing years.
These are quite simple examples by way of illustration. Lean programmes should always begin with a Value Stream Mapping process involving senior management and representatives of every department. The current state of the company, showing every step involved in every process to achieve targets should be mapped out. Analysis should then take place and a new map drawn out to show the future state of the company with all ‘waste’ removed. An implementation programme can then be devised and put into practice.
For any business improvement programme to be a success it is dependent upon all personnel embracing the changes it will invariably bring about. Best practice methods, manager awareness, training and the collaboration of all parties i.e. debt agencies, finance departments, lettings managers, maintenance contractors etc. all help to increase awareness and understanding of the common goal and enhance efficiency and speed.
It goes without saying that the adoption of lean techniques will assist housing associations and local authorities in meeting government targets. But it will also have the added benefit of enhancing their reputation as a provider of public services. Finance and cashflow should also improve as a result of increased efficiency and reduced ‘downtime’, but the key improvement will be seen in the reduction of lost housing years and the satisfactory housing of needy tenants.