As we approach a new year, it's a perfect time for nonprofit procurement leaders to reflect, realign, and prepare for the future. Shaping the path ahead starts with understanding the present - identifying challenges, seizing opportunities, and fostering growth and innovation.

The evolving landscape of the nonprofit sector will bring forth several key trends that will shape procurement strategies in the coming year. Some of these trends mirror broader industry shifts, addressing sustainability, technological advancements, and stronger supplier relationships. According to the Amazon Business 2024 State of Procurement some of these trends include:

• Digital Transformation & AI: 98% of respondents are planning investments in analytics and insights tools, automation, and AI for their procurement operations in the next few years.
• Sustainability and ESG: 85% of respondents say the difficulty of sourcing suppliers that follow sustainable practices prevents their company from setting or achieving sustainability goals for procurement.

And according to the National Council of Nonprofits organizations are also thinking about:

• Increased Demand for Services: After the public health emergency ended, numerous federal and state relief policies were phased out, resulting in the termination of pandemic assistance for millions. This led to reductions in SNAP benefits for ~30 million people and changes in Medicaid eligibility affecting up to 15 million individuals.
• Volunteer and Staff Retention: Three out of four nonprofit respondents report job vacancies (74.6% in 2023). By comparison, only a third (33.0%) of private businesses had job vacancies at any time between August 2021 and September 2022, according to U.S. Department of Labor data.

In addition to these considerations, increased inflation and interest rates can impact many facets of nonprofit procurement including increases to product prices, decreases in individual donations, and increased borrowing costs. While there are signs pointing towards a reversal in rates, it is best to plan for the worst case scenario.

To navigate these emerging trends successfully, it is crucial to actively harness and enhance supplier relationships. By fostering deeper collaboration and promoting open communication, nonprofits can uncover unexplored possibilities and identify potential areas for further cooperation. Embracing this proactive approach will not only unveil new opportunities but also establish a solid foundation for long-term success in a rapidly evolving market.

Exploring Opportunities with Procurement and Suppliers

In the dynamic world of nonprofits, the role of procurement and suppliers has evolved beyond just transactions. It's a partnership, a strategic alliance that could potentially unlock new avenues for growth and innovation. Building upon the trends identified, here are some areas to explore with your procurement function and suppliers:

• Leveraging digital technologies: Discuss with your suppliers the potential for cost savings through the adoption of digital technologies. Will they be comfortable transacting on a digital procurement platform? Can AI tools be incorporated for better supply chain management? These discussions can help align your digital transformation with your suppliers for smoother adaptation.
• Workforce shortages: If your nonprofit faces challenges with staff retention, are there ways that your supplier can streamline the procurement process? Are there additional opportunities for automation? Removing some of these manual processes can free up staff time to focus on the mission.
• Financial stability discussions: Open dialogues about inflation and interest rates can help both parties understand each other's financial pressures. Sharing these concerns may lead to more flexible payment terms or innovative pricing models that ensure mutual sustainability. And if you haven't already, make sure you are taking advantage of tax-exempt purchasing.
• Strategic procurement conversations: Active discussions about procurement strategies can reveal cost-effective opportunities. Perhaps there are bulk purchasing discounts, or opportunities for long-term contracts that lock in prices. Such discussions can lead to significant savings and more predictable budgeting.
• ESG Alignment: If your nonprofit is committed to ESG principles, it's essential to explore this with your suppliers. Can your suppliers help you direct spend towards products with sustainability certifications? Can they help you direct your dollars back into the community by supporting local businesses?

Remember, the key to a successful procurement strategy is communication and collaboration. By actively exploring these areas with your suppliers, you can align your nonprofit's mission with the practices of your suppliers. This not only enhances operational efficiency but also paves the way for long-term, mutually beneficial relationships.

The Future of Nonprofit Procurement

In the rapidly evolving landscape of nonprofit procurement, being proactive, strategic, and adaptable is key. Embracing digital transformation, focusing on staff retention, understanding financial trends, implementing strategic procurement practices, and aligning with sustainability and ESG principles are not just trends, but necessities in the coming years. It's important for nonprofits to view their suppliers not as mere vendors, but as strategic partners that can help them navigate these changes successfully.

Amazon Business is proud to work with over 100K tax-exempt, charitable organizations. We look for opportunities to partner with nonprofit organizations as they continue to support their cause or community.