Essential Strategies for Public Procurement Practices

Written by Zaiton Binte Abu Bakar

Essential Strategies for Public Procurement Practices

Written by Zaiton Binte Abu Bakar

by Zaiton Binte Abu Bakar, ADPSM

For many years, public procurement was perceived as an administrative, back-office function. However today, it is seen as a crucial pillar of services delivery for public sector and a strategic tool for achieving key policy objectives: from budget accountability, to spending efficiency, to buying green and improving outcomes in health, to tackling global challenges such as climate change, and promoting socially responsible suppliers into the global value chain.

Using Analytics to Enhance Cost Efficiency

Non-profits cannot always depend fully on public funds. They need to sustain themselves throughout the entire year by being efficient about their operations and donor outreach. Analytical tools can help on those fronts, and recent research indicates that such solutions are needed at non-profits.

Examining Donor Demographics

Greg Hagin, Ian Swedish and Adam Miller of CCS Fundraising say that analytics can help non-profits figure out the best prospects to engage to make a donation. Writing in the Philadelphia Business Journal, they note that “modeling can be used to examine donor demographics, giving data, and interactions with an organization to predict future giving behaviors of potential donors.” Wealth screening and publicly available information can then be used to determine the prospects with the most money to potentially donate.

Strengthening Membership Recruitment

Analytics can also help strengthen an organization’s membership recruitment and fulfillment operations. Traditionally, non-profits purchased lists of names in their target market and sent communications including their existing membership base.

Tracking and Analysing Revenue

It is noted that analytic tools can also be used to track and analyze non-profit staff activity. It motivates them through data-driven performance benchmarks. Activity metrics include donor visits, solicitations and gifts received. These new prospects will provide the baseline health of the donor pipeline and enable revenue forecasting.

The diagram below shows the spend analysis organized into 3 categories.

Launching of Foster Parent Recruitment Campaign

Providing Quantifiable Data to Donors

Analytics can also help improve donor relations by providing more quantifiable data to donors on the impact of their “investment,” which may then motivate them to give again. An example is the tax deductions for charitable donations, as shown in the diagram below.

Measuring Return on Investments

Organizations must make data measurement a priority. But it must also understand the various ways that impact data can be effectively communicated. Such solutions can provide significant benefits to non-profits, including the ability to measure return on investment, and knowing what they are doing well and identify programs that need to be improved.

Using Blockchain to Reach Out to Ready-To-Give Donors

Upholding the Image of Charities

Transparency builds trust. Donors are not likely to give to charities implicated in wasteful or illegal practices, decreasing whatever good they are doing. The ability to trace funds from their point of donation to the recipient will necessarily crack down on wasteful spending and lift a fog from the philanthropic landscape, exposing fraudulent actors and re-establishing trust for donors who rightfully expect their money to be passed along under true pretenses.

Transforming Digital Transactions with Distributed Databases

Blockchain is no longer a buzz word. It is now used beyond currency transactions. Blockchain is a distributed ledger where data can be added but not copied. It delivers huge operational benefits. With distributed databases, it has the potential to transform all kinds of digital transactions, including those involved in procurement and supply chain and delivers a new level of trust and transparency.

Minimizing Administrative Costs through Automation

Blockchain technology minimizes administrative costs through automation, providing more accountability through traceable giving milestones, and allowing donors to see more clearly where their funds are going, blockchain may help restore some of the lost credibility to charities that prove worthy of the public’s trust. Some of the methods using data analytics and data mining aimed at reducing administrative costs include vendor consolidation, effective Purchase Order managements, effective tender and contract management and internal cost reduction by extensive value chain analysis.

Providing Platform to Reach Ready and Willing Donors

Blockchain-based platforms aim to provide charities with a marketplace to reach a ready-to-give audience, taking far fewer fees than traditional marketing and fundraising agencies, providing proof of need and proof of receipt to ensure that the cause is indeed a worthwhile one and that the funds reach the intended party. As a result, more funds can reach the right, needy recipient due to lower administrative fees.

The diagram below shows possible ways to apply the Blockchain for the non-profit sector.

Implementing an Integrated Strategy through Innovation

Non-profits know that delivering the same services, in the same manner, is insufficient. They must struggle to anticipate emerging opportunities for distinctive offerings or approaches that might extend their reach or magnify their impact.

These are the key areas that dominate their concerns:

Reducing Reliance on Government Grants and Public Funding

Non-profits largely served as government contractors relying heavily on public support. Developing a more independent non-profit sector comes with many challenges. As long as organizations are seen to have strong links to the government, they’ll continue to face hurdles in such areas as attracting top talent. With innovative ways of fund-raising and reduction of costs through well-defined processes and integrated systems, the dependence can be reduced. In order to solve the government’s budget problems, some policymakers have called for cuts in spending on social services, assuming the non-profit sector can fill the gaps.

Attracting Talent and Enabling Leadership Succession

One of the challenges is attracting quality talent below the executive-director level. Many NPOs still struggle to recruit new blood in a vibrant job market. Among the biggest reasons is the need to compete with rising salaries in both the private and non-profit sectors. Despite the need to maintain lean organizations, they must also offer the appropriate career development opportunities to show recruits how they could advance in non-profits.

To overcome this challenge, an integrated strategy to both attract and retain talent must be implemented. The most effective NPOs offer strong training and career development, build a collaborative and cohesive culture and take full advantage of the organization’s mission to instill passion in job candidates. For example, Boys’ Town invests heavily in staff training and skill development. The organization offers candidates several incentives to join the staff: On-the-job training helps new hires become certified social workers, and a company-wide training plan enables staff to reach their career goals. As a result, Boys’ Town has achieved robust growth in donations, allowing it to help more youths in need.

Improving Disclosure and Transparency

Appropriate governance, statutory compliance, and continuous communication with stakeholders will help facilitate innovative ways to inspire confidence and trust in the public sector. Transparency in the public sector would allow small and medium-sized companies to access public sector contracts.

Effective Risk Management System

Organizations need to take risks to create value and manage risks to protect value. The challenge is to find and keep a good balance between risk and reward in a fast-changing and increasingly complex environment.

The risk management process includes:

• Understanding the organization’s objectives;
• Identifying threats associated with the achievement of objectives combined with the evaluation of the probability and the strength of the potential impact of individual types of risks on the objectives of the organization;
• Developing programs aimed at eliminating threats that have been identified; and
• Monitoring and evaluating risks with the aim of finding their solutions.
Risk avoidance includes:
• Abandon activity which is generating risk or find an alternative method to achieve the same objective with which no risk is attached
• Risk reduction: When it cannot be avoided, reduce it using different procedures
• Risk transfer: Transfer to insurance
• Risk-retention: Retain risk if the organization is capable of meeting risk when it crystallizes –develop new innovative approaches that may benefit the charity in the long run.

Equipping Charity Board with Digital Skills

Trustees’ lack of digital understanding is undermining their charity’s ability to move forward. ‘Digital trustees’ can help close the gap, and if you recruit the right person, they can empower the whole board to engage effectively with digital. Trustees also need to foster good relations with the IT staff. An insightful board reporting on digital info will keep your board informed and ahead of the trends.

The barriers to Increase Digital and Tech Capacity on Charity Boards include an understanding of roles, rigid processes and bureaucracy, cultural fit and mindset, receptiveness to change and process and speed. The ways to increase Technology and Digital Representation on Board include engagement of staff taking on trustee roles, creating trustee readiness programs, considering new methods by using virtual meetings, digital chat rooms such as Slack, electronic board papers, Dropbox and Google Docs, as well as creating awareness and signposting.

Digital Trustees: An Answer to the Charity Digital Skills Gap

Conclusion

Sustainable leadership within non-profit organizations is built upon the platform of creating and preserving, securing, sustaining, addressing, developing, and activism. NPOs must also be vision and results-oriented, adaptable to changing conditions, have a broad base of community support, have strong internal systems and be key champions in change.

Airbus’ A-Cubed launches blockchain for non-profits


References

Adrian Goh, GDSCM. (2017). “Blockchain Technology – The Next Revolution of Supply Chain”. Retrieved from SIPMM: https://sipmm.edu.sg/blockchain-technology-next-revolution-supply-chain, accessed 21/06/2019.

Fay Khoo Yock Fan, GDPM. (2018). “Top Five Emerging Trends in Procurement”. Retrieved from SIPMM: https://sipmm.edu.sg/top-five-emerging-trends-procurement/, accessed 23/6/2019.

Katie Mantell. (2015). “Increasing the Digital Capacity of Trustee Boards”. Retrieved from https://thesocialchangeagency.org/wp-content/uploads/2018/02/GetWired.pdf, accessed 21/06/2019.

Marek Matejun, (2014) “Risk Management in Public Sector Organizations: A Case Study”. Retrieved from
https://www.researchgate.net/publication/283153062_Risk_Management_in_Public_Sector_Organizations_A_Case_Study, accessed 23/6/2019.

Phil Goldstein. (2018). “Why Nonprofits Need to Implement Data Analytics Solutions”. Retrieved from https://biztechmagazine.com/article/2018/12/why-nonprofits-need-implement-data-analytics-solutions, accessed 20/06/2019.

Sam Mire. (2018), “Blockchain For Non-Profits: 10 Possible Use Cases”. Retrieved from https://www.disruptordaily.com/blockchain-use-cases-non-profit/, accessed 21/06/2019.

Sebastien Lamy and Usman Akhtar. (2015). “Unlocking the Power of Singapore’s Nonprofits”. Retrieved from https://www.bain.com/insights/unlocking-the-power-of-singapores-nonprofits/, accessed 21/06/2019.

Soren Kaplan, (2018). “The Future of Nonprofits: Run Them Like an Innovative Business”. Retrieved from https://www.inc.com/soren-kaplan/the-future-of-non-profits-run-it-like-an-innovative-business.html, accessed 21/6/2019.

About the Author: Zaiton Binte Abu Bakar has more than 20 years of experience across diverse sectors that include manufacturing, finance, hospitality, and the non-profit sector. She currently manages the procurement function in a large charity that delivers healthcare, education and other welfare services, with purchases more than $20m annually. Zaiton holds a BA (Hons) degree in Banking and Finance from the University of Central England. She is a member of the Singapore Institute of Purchasing and Materials Management (SIPMM). She completed the Advanced Diploma in Procurement and Supply Management (ADPSM) in July 2019 at SIPMM Institute.

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