For Nonprofits, Data Analysis and Digital Transformation Maximize Procurement Capabilities

Supply chain isssues, inflation, the pandemic, and our continued sense of uncertainty accelerated digital transformation efforts in the procurement space. More and more B2B buyers are taking advantage of e-procurement technologies to find, compare, and purchase supplies in their price range that align with their core values.

A recent Amazon Business study of 440 B2B buyers in a variety of sectors generated these findings:

• 91% state a preference for online purchasing.
• 58% now make purchases that have to be delivered directly to an employee’s personal residence.
• 84% say their organization plans to increase the purchasing budget reserved for Black or other diverse-owned businesses.
• 63% say improving sustainability in their purchasing practices is a top goal.
• 55% say it’s difficult to source suppliers that follow sustainable practices. Among this group, 81% agree this difficulty is holding their company back from achieving procurement sustainability goals.
• 89% say they would be more likely to purchase sustainable products if it was easier to identify them.

All businesses and organizations must contend with inflation and supply chain hang-ups, but nonprofits face unique challenges. Economic jolts and the COVID-19 pandemic led to increased demand on nonprofits, due to greater needs in the communities they serve.

As noted in a June 1, 2022 article by the National Philanthropic Trust, “nonprofits are particularly vulnerable to inflation because they cannot react to rising prices the way businesses can. Nonprofits are then left with a tough decision: what services they can and can’t afford to provide. In a particularly difficult twist, as inflation continues to climb, the need for the vital services nonprofits provide (especially those in human services) will increase, but become less available.”      

Greater utilization of e-procurement can help nonprofits overcome common pain points like accessing a wider range of suppliers and managing distributed purchasing. Technological advancements – like purchase order and invoice, storage and sharing, approval workflows, expense management, and guided buying capabilities – enable operational efficiencies across entire organizations - not just in procurement.

As digital transformation continues to ramp up, nonprofit procurement teams will derive significant benefits if they refine their processes, workflows, and digital strategies to take full advantage of e-procurement.

Data Analytics for Nonprofits

The challenge organizations face when it comes to optimizing purchasing is consolidating expenditures from multiple sources for a holistic view of spend. By consolidating tail spend through purchasing solutions such as Amazon Business, organizations can increase visibility with analytics tools to identify cost saving opportunities. With frequently purchased products for example, organizations can now be more proactive at identifying cost-savings opportunities with bulk buying.  Procurement teams that don’t maximize e-procurement technologies might face significant operational challenges that diminish efficiency. Amid hiring challenges, organizations face limited resources in time and money and must find ways to do more with less.   

Nonprofits can leverage data in a variety of scenarios. In an article posted by the University of San Diego (USD), it was noted that nonprofit organizations stand to gain from the valuable insights data analytics can help deliver.

“Like for-profit businesses, nonprofit organizations require funding and seek ways to improve efficiency,” the USD article stated. “Data analytics can help on both fronts, in addition to helping nonprofits identify patterns of giving, which aids in predicting donor behavior for planning purposes. Many nonprofit organizations are already well poised to start using data to their advantage.” 

USD said data analytics benefit nonprofits in areas such as management recruitment and retention; fundraising and outreach; accounting and reporting; and budgeting and forecasting.

“By modeling complex scenarios, data analytics can help nonprofits monitor financial health in real time and make course corrections faster, ensuring less resources are wasted,” USD said.

By consolidating purchasing in one location, E-commerce platforms promote a wide range of nonprofit organizational goals. Consolidated purchasing allows for organization-wide purchasing data, thereby maximizing the efficiency and mission alignment of procurement processes. Organization-wide decisions take time to implement and roll out, especially in larger nonprofits. But with the right technology, buyers have the opportunity to lead change across their organizations. Sophisticated digital procurement features can empower buyers at organizations of all sizes to start making a difference with their purchases now.

Toys for Kids, a Nonprofit Success Story

Consolidated information in a centralized system has benefitted organizations such as Toys for Kids. Seattle Mariners outfielder Dave Henderson and Rick Rizzs, the team’s longtime radio announcer, started Toys for Kids in 1995 by collecting donations in a baseball hat and purchasing toys for 300 local homeless children. Today, executive director Heather Jones is growing Toys for Kids’ reach, using Amazon Business to deliver results at scale so the organization can expand to offer school supplies, school meals, and more—to children in need.

Jones said tools like Spend Visibility and Guided Buying (Business Prime features) give her a clear picture of the entire organization. She’s able to easily set budgets for every agency, ensure they stick to them, and spot trends to plan for next year. “My agencies can view all of the order information in one place.” Jones said.

“The name sounds like we’re just doing toys, but I feel like people forget these kids need help throughout the year.” Next year, she hopes to provide every agency with the budget to buy back-to-school supplies as part of the backpack program. Right now, Jones handles the entire process herself—buying all of the supplies, and packing and delivering the backpacks.

Consolidating purchases and more visibility in their spend can empower organizations better serve their community. With these cost and time savings, nonprofits can focus on expanding their impact and mission.

Data Analytics and Social Responsibility

Looking toward the new year, data analytics can help nonprofits execute smart buying strategies that stretch dollars and demonstrate fiscal responsibility to donors.

At the same time, data analytics can aid organizations in their pursuits of social initiatives, such as supporting diverse-owned businesses and increasing purchases of products with sustainability certifications.

Social responsibility, including efforts around diversity and sustainability, are extremely important to mission-oriented nonprofit organizations. According to the nonprofit Sustainable Purchasing Leadership Council, sustainability includes social, economic, and environmental stewardship. It defines sustainable purchasing as “purchasing that builds healthy communities, economies, and environments all along local and global supply chains.”

Peggy Brannigan, director of Global Environmental Sustainability at LinkedIn, says that “across the nonprofit field, many of us are looking for ways to incorporate sustainability into our work. That’s why nonprofits need to start advocating for environmental sustainability – and connect with peers, networks, and groups with shared goals.”

The Minority Business Development Agency (MBDA), an arm of the U.S. Department of Commerce, has noted that minority-owned businesses expand and diversify the tax base, creating sustainable communities with a steady rate of economic growth.

“By 2044, the nation’s prosperity will rely even more on minorities, the fastest growing segment of the population,” the MBDA states on its Web site. “Entrepreneurship is a sure pathway to wealth creation and a thriving national economy. Today, U.S. minority business enterprises represent 29% of all firms but only 11% have paid employees. If MBEs were to obtain entrepreneurial parity, the U.S. economy would realize 13 million more jobs.”

Optimizing purchases and achieving social responsibility goals are not mutually exclusive. With the right kinds of e-procurement tools, organizations can use search and filter features to find products from certified suppliers that are also within their price range. Considering that business buyers’ most frequently cited pain point over the past 12 months was accessing a wider range of products in their price range, e-procurement can help organizations access more suppliers, reduce costs, and diversity spend.

“Buyers can find it difficult to identify whether a supplier has certain certifications, like products that yield net-neutral carbon emissions or contain fewer packaging materials,” said Mike Kernish, director and general manager of Public Sector Accounts, Amazon Business. “Digital procurement through Amazon Business simplifies the process of finding businesses with sustainability-related certifications by making certifications easily searchable and immediately visible.”

Opportunity in the New Year

Year after year, digital transformation trends remain in the spotlight. Most organizations have now realized that this type of transformation is continuous. Rather, digital maturity and resiliency require constant optimization based on new technologies and insights.

Many organizations that have experienced more than a year of remote work understand the imperative to align on operational objectives and integrate digital workflows to meet these goals. Outdated processes may have been manageable, albeit inefficient, in the past. But a distributed workforce will likely remain permanent to some extent given growing preferences for flexible work options and the increasing use of technologies that enable many employees to do their jobs from anywhere. With this shift well underway, streamlining and digitizing workflows is becoming increasingly important.

Procurement leaders have the opportunity to drive alignment and integration in their organizations by implementing digital solutions that not only enable greater cross-team efficiency, but also empower individual users to take on more strategic roles.

Originally published in the Nonprofit Times 2022 digital newsletter. Click here to view.