Hosted by TechSoup Connect BC on June 7, 2022.
https://events.techsoup.org/e/m6r8cn/
Every charity wants to do as much as possible with the funds that they have. However, the pressures of the last two years have accentuated this need even further. One way to make your donors’ dollars go further is to be smarter at managing your third-party suppliers.
Learn how to create effective and easy-to-follow procurement processes, with simple tips and examples for every nonprofit. Our expert presenter will cover:
Finding the best value
Sourcing and contract management
Supplier and savings management
Hiring compliant suppliers who share your values
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How to Make Your Donors’ Dollars Go Even Further
1. How to make
your donors’
dollars go
further
Adam Thomas, Co-founder of
oboloo
2. Be smarter at managing your
third-party vendors
1. Purchasing vs Procurement
2. Sourcing Goods & Services
3. Contract Management
4. Vendor Management
5. Savings Management
6. How to make it happen
7. Digital Solutions
3. Purchasing vs Procurement
• Purchasing
• Procurement
• An everyday example of procurement
‘Effective management of third
party spend can on average
release savings of between 7-
12% and can have a direct
impact on the bottom line’
PwC, 2014
4. Sourcing Goods & Services
Steps in the Sourcing process:
What exactly
is required?
What
represents
best value?
Which
vendors to go
to?
Evaluate
vendors
Negotiate &
Award
Contract
Implement
Specify what
and how much
of it is
required
Specify what’s
important and
how to
compare
suppliers
Establish a list
of 3+ vendors
to quote
Assess which
vendor will
deliver best
value
Agree on
acceptable
commercials
and contract
terms
Work with the
vendor who
has experience
of doing this
5. What’s Best Value?
• Cost
• Quality
• ESG (Environmental Social & corporate Governance)
• Your values
"Increasing migration from a
relentless price and cost focus to a
more holistic approach" PWC, 2020
6. Tips for Sourcing
• Involve internal stakeholders from the beginning
• Review previous purchases and practices to identify new efficiencies and reduce waste and redundancy
• Provide prospective vendors with details of what’s required to enable complete responses
• Have a clear and objective scoring criteria for vendor assessment
• Negotiate - If you don’t ask you don’t get!
• Read the vendor contract before signing and be clear about any buyer and seller obligations and key dates
• Treat all vendors as you’d want your own people to be treated and remember that feedback is a gift
• Run sourcing activities towards the end of every contract to ensure the continued receipt of best value
7. Contract Management
• Contract repository
• Store all associated contract documents
• Permanent records of active and archived contracts
• Alerts of key contract dates
‘The average company loses about 9% of annual revenue due to poor contract management practices. With
typical profit margins hovering around 10%, even halving this loss can increase profit margins by 50%’
International Association for Contract & Commercial Management (IACCM)
8. Tips for Contract Management
To have consistency,
transparency and control
over contract
management
create and document a
simple process that
everyone can follow
keep up to date
contract records and
documents
Avoid missing contract
notice periods or end
dates by simply diarising
key dates. Missing them
can be expensive as
many contracts
automatically roll-over
Avoid evergreen
contracts. These favour
the vendor as they roll
over and over.
Companies lose 3-5% of
savings opportunities
because of auto-
renewing evergreen
contracts
Review contracts every
two or three years to
ensure that they’re still
relevant and accurate
and meet the actual
requirements
9. Vendor Management
• Vendor repository
• Store all associated vendor
documents
• Compliance
• Preferred Supplier List
‘65% of procurement leaders say they have limited or no visibility beyond their tier 1 suppliers’
The Deloitte Global Chief Procurement Officer Survey 2018
• Monitor performance
• Monitor risk
• Monitor sustainability
• Vendor on-boarding
process
10. Tips for Vendor Management
To have consistency,
transparency and control
over vendor
management
create and document a
simple process that
everyone can follow
keep up to date
vendor records and
documents
Don’t assume that just
because a vendor was
compliant last year that
they are still compliant
this year, especially
important for critical
vendors
Record vendor
performance regularly,
getting feedback from a
variety of users so that
it’s balanced and
objective. Feed it back to
vendors
Create a Preferred
Supplier List that is
easily accessible by
employees so that they
know which vendor to
go to for different goods
and services
11. Savings Management
• Monitor Projected and Realised savings
• Cost reduction
• Cost avoidance
• Split savings projects into multiple
milestones
Reducing costs is the top priority for 76.4% of CPOs, followed closely by improving operational
efficiency. Cost saving has been the number one priority for the past ten years
Deloitte CPO 2021 Survey
12. How to make it happen
• Do-It-Yourself
• Work with specialist consultants
• Leverage a digital solution
Purchasing is the process of creating a purchase order, approving it, placing the order, delivering the goods and services, and obtaining payment instructions. Its short-term tactical
Procurement is procurement encompasses all of the activities from identifying which goods and services are required by a business, to sourcing the best value suppliers, to negotiating and managing contracts to managing the suppliers and evaluating their performance. Its longer term and strategic.
An example of us following a procurement process in our own lives
An individual wants to purchase a new car. Having done their research, they come up with list of the make and model of the car and the exact specification they want. Their choice of car will be driven by their values and budget.
Next, they’ll research the garages who are able to supply the new car they’re after and having test driven the car they’ll make their choice from which one they purchase the car. Cost is going to be important, but there may be other values considered as well.
Having selected the garage, negotiated the price of the car a three-year lease finance contract is signed. Sometimes there may be problems that arise that need to be resolved and it’s the supplier’s response to this that we have to manage, which costs us our valuable time and sometimes money.
Towards the end of the contract, assuming the individual wishes to purchase another new car the process is repeated all over again.
What exactly is required? - Specify what and how much of it is required
What represents best value? - Specify what’s important and how to compare suppliers
Which suppliers to go to? - Establish a list of at least three suppliers to get quotes from
Evaluate suppliers - Assess which supplier will deliver best value
Negotiate & Award Contract - Agree on acceptable commercial and contract terms
Implementation - Work with the supplier who will have experience of doing this
To have consistency, transparency and control over Supplier Management create and document a simple process that everyone can follow and keep up to date supplier records and documents
Don’t assume that just because a vendor was compliant last year that they are still compliant this year, especially important for critical suppliers
Record vendor performance regularly, getting feedback from a variety of users so that it’s balanced and objective. Feed it back to suppliers
Create a Preferred Supplier list that is easily accessible by employees so that they know which vendor to go to for different goods and services
To have consistency, transparency and control over Supplier Management create and document a simple process that everyone can follow and keep up to date supplier records and documents
Don’t assume that just because a vendor was compliant last year that they are still compliant this year, especially important for critical suppliers
Record vendor performance regularly, getting feedback from a variety of users so that it’s balanced and objective. Feed it back to suppliers
Create a Preferred Supplier list that is easily accessible by employees so that they know which vendor to go to for different goods and services
oboloo is a simple and intuitive self-service cloud software that gives organizations consistency, visibility and control over every part of the procurement process from sourcing and contract management to supplier management and savings management. Enabling organizations to work with compliant suppliers whose values align with their own.