Executive Summary
Procurement and Supply Chain Management P&SCM are two of the most important functions that inevitably lead to the creation of a high level of value proposition for an organization’s customers and stakeholders. The objective of this paper is to focus on a preselected organization that can make use of improved ways how to do their operations from a procurement and supply chain management perspective. In this paper, the organization that the author chose to focus on was Education Above All Foundation (EAAF).
In this report, the EAAF’s fundraising and partnership building department were emphasized. The goal was to be able to gather as much information about their overall supply chain management when it comes to initiating and implementing fundraising and partnership building programs (also known within the EAAF as co-funding). Based on this information, it would be safe to suggest that the target procurement function would be the initiation and implementation of fundraising programs—because this is the essence of the EAAF’s fundraising department’s existence, and making continuous improvements in partnership building with multinational corporations and other nonprofits to improve the co-funding rate of the organization.
The discussions in this paper focused on analyzing the importance of using appropriate procurement and supply chain management strategies to ensure that the highest level of value for money proposition can be achieved.
As a general rule, stakeholder groups such as customers and other suppliers (i.e. partner businesses) would only choose or want to pair up with another organization if it can prove that it has the ability to offer a continuously increasing level of value as far as their operations are concerned. The stakeholder groups that were included in this discussion were the following: students, government, society, educational institutions, and other industries (e.g. other nongovernment organizations and for profit organizations). A PESTLE analysis was conducted in order for EAAF’s fundraising department to be able to check the type of situation it is dealing with as far as P&SCM efforts are concerned. Mendelow’s stakeholder analysis matrix and the supplier preference model were also used as tools to further justify the arguments presented in the paper about the EAAF’s position and performance when it comes to procurement and supply chain management.
As a summary, the EAAF is doing good as far as the outcomes of its programs and its internally monitored key performance indicators are concerned. This is thanks to the strong and robust procurement and supply chain network that that it has established together with its stakeholders. However, there are certain recommendations that it can follow to further improve is performance.
For the recommendations, it has been found that EAAF should focus on creating mutually beneficial partnerships with its stakeholders. The organization cannot really expect corporations and private entities to simply donate and pledge a certain amount for its fundraising efforts without expecting anything in return. The principles of P&SCM simply do not work that way. EAAF should offer something in return to their partners in order for it to boost its fundraising outcomes. That way, EAAF would benefit just like how their partners would. As a result, long term partnerships between them will be developed. This recommendation can be backed up by the supplier preference model which shows that organizations that have high profit potentials and high business value tend to be the ones that get high quality of partners. As far as the partnership building goals of the EAAF are concerned, it should: being more aggressive in terms of looking for multinational corporations that have existing backlogs in their corporate social responsibility programs; convince the government of conflict-stricken countries to not take the education of their citizens for granted; and empower the community members (those who cannot be classified as out of school children) who have no means to help through training and education so that their effort and manpower can be utilized.
Background Discussion of Education Above All Foundation
The Education Above All Foundation is a nongovernment organization whose ultimate vision is to be able to provide free and easily accessible education (among other knowledge sources and avenues) to those who are denied of them. This is based on the belief (that the EAAF is also an advocate of) that suggests that everyone being educated is a right and because in this highly competitive world, everyone should be educated in order for them to be truly able to live a better life.
This brings the situation back to the lack of access to education. It certainly appears that lack of access to education is the root cause of most of the problems that people tend to experience. The good thing about EAAF is that their mission is to eradicate that root cause. According to their website, education has the power to change lives, families, communities, and even entire economies .
Research on the Business Aspect of EAAF
Although EAAF is a nonprofit organization, it still relies on a stable stream of income in order to finance its operations. This is one similarity between for-profits and nonprofits that can neither be disputed nor denied. This is what gives importance to the process of discussing the business aspect of EAAF.
In December 2016, the EAAF announced that it is going to increase its investment in a new generation of leaders in Gaza, awarding a total of 265 new scholarship programs to the citizens there . The organization also aims to establish key partnerships with multinational corporations—despite the fact that these are for-profits, in an effort to reinforce the impact of their programs . This can prove to be an effective fund-raising strategy considering that most large multinational corporations also have made pledges to give back to the members of the community (especially those that are really in need) in the form of corporate social responsibility programs. This can prove to be a pivotal point of divergence between an organization like EAAF and multinational corporations. The company has also been investing in information technology improvement projects in an effort to bolster the impact of their education programs such as the Al Fakhoora in the Middle East .
Focusing on the business aspect of the organization, according to the company’s latest annual report filing in 2015, the company has been actively initiating education-related programs in more than 40 countries and has managed to help more than 10 million out of school children in that year alone . Total funding for their programs also reached 1.2 Billion USD in the same year, with a co-funding target of 50% and an average investment per out of school children of $100. Considering these data, it would be safe to suggest that the company indeed made its goal of restoring education one child at a time, a success, at least for that year.
Mendelow’s Stakeholder Analysis
This tool measures the power and level of interest that a stakeholder has based on their position in the four quadrant matrix. The X axis shows the level of interest while the Y axis shows the level of power of a stakeholder. This can be seen in the illustration below.
Below is a more specific matrix that applies to EAAF’s current case.
Power in this case refers to the ability of a stakeholder to commit an action that may influence the outcomes of the organization’s efforts. The level of interest on the other hand refers to the likelihood that a particular stakeholder would use his power to influence the outcomes of the organization’ efforts, either in a positive or negative way.
In Box A, these are the low power and low level of interest shareholders. They can be the out of school children and the beneficiaries of the programs; this is because they neither have the power and the likelihood of them exercising whatever amount of power they may have is nil because they tend to be misinformed—i.e. they lack education. Stakeholders in Box B are those who want to participate in the programs but do not have the power to; this is why this is composed mainly of the community members of the areas where the EAAF’s programs are being implemented. Stakeholders in Box C are those who could jeopardize the programs being implemented by the EAAF (e.g. the government and militant groups in the conflict-ridden areas where it conducts most of its programs). This is because they are not interested in the programs that EAAF implements and they are in a position of power to either stop or simply impede the organization’s efforts. And lastly stakeholders in Box D are those who EAAF should keep as partners. They are the ones that have both the level of interest and power needed to really make positive changes in the organization’s programs’ outcomes. This is why Box D includes other multinational organizations with existing CSR programs and other nonprofits who have the same mission and vision as the EAAF.
As far as opportunities for improvement are concerned, it would be in the best interest of the EAAF to keep their good relations with the stakeholders who belong to quadrant D because these are the ones who can strengthen the impact of their programs and bolster the stability of their supply chain network. As for the stakeholders in quadrant C, it should create ways to encourage the government to become a high power and high level of influence kind of stakeholder; the goal of this is to make the countries that they are targeting more open to the education-related programs that the EAAF is conducting. In most cases, the governments of countries which the EAAF is trying to help is more focused on political stability and security concerns than on other issues like education and so the EAAF should make it a point to convince people in the government that education too is important even in times of crisis. And lastly, those who belong to quadrant B (low power, high level of interest) should be empowered. These are the people who are very much willing to help make the EAAF and its programs become more successful but do not have the means (or power) to do so. This can be done by training and equipping them with the right knowledge and skills on how they can help with processes such as program implementation, team leading, and even teaching.
Another interesting model to use is the Supplier Preference model which shows how other organizations see the organization, as shown in the figure below .
What the matrix above shows is the way how other organizations may see a certain organization like the EAAF according to the profit potential (i.e. account attractiveness) and the relative value that it can offer. Ideally, an organization should have a high level of profit potential and value in order to be deemed attractive. Considering what is already known about the EAAF, it would be safe to suggest that it has a low level of profit potential (i.e. account attractiveness) but a high level of relative value, so it would be placed in the fourth quadrant (i.e. exploitable), based on the figure above.
Other notable organizations include the Doctors Without Borders, the United Nations Children’s Fund, and the Human Rights Watch. However, it is important to note that the logistics and operations of these other nonprofit organizations are different from that of the EAAF and so it would not be a good idea to do a side by side comparison with them. However, what is certain is that each of these organizations have their own internal key performance indicators, just like the EAAF, that they monitor from time to time in order to evaluate whether they are meeting their goals and objectives or otherwise. So far, this process of monitoring based on KPI can be identified as a best practice among nonprofit organizations like the EAAF and these ones.
Procurement and Supply Chain Management for EAAF
Fundraising is the bread and butter function of nongovernment organizations. The same is true for EAAF. In order to understand this, one has to be aware of the overall source of funding of NGOs. A good majority of NGOs are nonprofit organizations; this means that they neither exist nor operate to make a profit out of their existence.
Despite being nonprofit in nature, it would seem that NGOs would still have to behave and operate like businesses after all. A general rule that applies to both nonprofit and for profit organizations is that they all require a certain level of liquidity in order to continue operating. Even NGOs that are purely managed and manned by volunteers would still have to pay certain bills and make purchases. Without funding, any organization would simply cease to exist. This is a fact that even EAAF knows and that is why it also relies on the effectiveness of its fundraising events and initiatives. In light of these information, EAAF stands to benefit greatly from the implementation of an analysis that centers on ways how it can improve the effectiveness of its fundraising programs by means of increase the value of its operations.
The Fundraising Department (PESTLE Analysis)
The fundraising department is one of the most important components of an NGO like EAAF. Its goal and main responsibility is to coordinate with existing and potential donor individuals and groups, in an effort to gather pledges and donations. This is the main source of income for NGOs. As mentioned earlier, without the necessary funds to operate, an NGO would cease to exist, despite being manned by volunteers and being exempted from various taxes and expenses. They, just like any other organization, require fund to operate. This should highlight the importance of improving the value for money proposition of the fundraising department of EAAF.
Political
Is not tied politically to any country or government
Wide-ranging international operations
Most of the EAAF’s projects and programs are situated in poverty and conflict (often political) stricken countries
Economic
Providing access to education in countries that are stricken with poverty and conflict is not economical; projects tend to be more expensive because of these logistical handicaps
EAAF has no regular source of funds; relies more on donations, grants, and pledges
Social
EAAF caters to a diverse range of social and cultural groups; some may be more receptive than the others
Technological
EAAF can already cater to more advanced (i.e. online) forms of coordinating with its stakeholders and partners
Being more connected to its stakeholders and partners can greatly improve its fundraising outcomes, and reduce the costs of its operations as it has to send volunteers to certain locations when and if actually needed.
Legal
The services and programs that EAAF provides can be considered as a humanitarian effort; such efforts face little to no legal restrictions in most countries
Environmental
EAAF purely deals with education-related concerns and projects; Environmental factors have little to no impact on the organization’s efforts and operations.
Analyzing the Importance of the Partnership Model for the EAAF
The truth about the partnership model is that it is highly reliant on the potential partners (e.g. other organizations, businesses, and nonprofits) that the EAAF may work with when implementing its organizations. Another important piece of information about the partnership model is that it is also essentially just another type of fundraising program or component. That is, the EAAF raises funds for its programs by creating partnerships with other organizations. EAAF refers to the process of partnering with other organizations as “co-funding”. To emphasize just how important, the partnership model is for the EAAF, in their annual report in 2015, it can be seen that their target for the year 2015 was to reach a co-funding (i.e. partnership) rate of 50%--where they will presumably fund 50% of the program (through their other fund-raising programs which were discussed earlier) while their partner will take care of the remaining 50%. The EAAF was able to reach a co-funding target rate of 50%. In fact, the average co-funding rate since 2012 stands at 61% which means that EAAF’s partners have funded at least 61% of their active programs in now more than 40 countries worldwide. In 2015, that amounted to around 737.7 million USD’s worth of investments out of the total 1.213 Billion USD’s worth of investments that the company managed for that year. These data show that the partnership model is the other bread and butter mechanism for the company.
As it is, the EAAF is applying the partnership model perfectly. This can be evidenced by how it has attracted partners who would fund, on average, 61% of its programs. From a business case, it can definitely improve this figure by implementing the following recommendations:
Being more aggressive in terms of looking for multinational corporations that have existing backlogs in their corporate social responsibility programs.
Convincing the government of conflict-stricken countries to not take the education of their citizens for granted.
Empowering the community members (those who cannot be classified as out of school children) who have no means to help through training and education so that their effort and manpower can be utilized.
Conclusions and Recommendations
In conclusion, there is a lot of upside for the EAAF to continue pursuing a higher level of value for money proposition for its stakeholders. As discussed in the class practitioner modules, EAAF should be better off developing its P&SCM network by creating mutually beneficial relationships with its partners. Focusing on the fundraising aspect of its operations, it should aim to team up with the stakeholder groups that have the potential to offer the necessary liquidity for the organization’s programs in exchange for what they expect or want to receive. When it comes to NGOs, what partners typically want is the publicity and goodwill involved in partnering with an NGO.
As for the partnership model of the organization, it should focus on: being more aggressive in terms of looking for multinational corporations that have existing backlogs in their corporate social responsibility programs; convincing the government of conflict-stricken countries to not take the education of their citizens for granted; and empowering the community members (those who cannot be classified as out of school children) who have no means to help through training and education so that their effort and manpower can be utilized.
References
Colwell, T. (2012). Supplier Preferencing Matrix. Acuity Consultants, Retrieved from http://acuityconsultants.com/wp/2012/02/how-to-select-suppliers-to-add-value-beware-the-suppliers-perspective/supplier_preferencing/.
EAAF. (2015). Education Above All Annual Report. 01-68.
Education Above All Foundation. (2016). The transformational power of education. EAAF, Retrieved from http://educationaboveall.org/#!/about/3.
Gulf Times. (2017). EAA Showcased at Qatar ExxonMobil Open 2017. Retrieved from http://www.gulf-times.com/story/527527/EAA-showcased-at-Qatar-ExxonMobil-Open-2017.
United Nations Children's Fund. (2016). Information Technology Breaks Barriers between Palestinian Adolescents. Relief Web, Retrieved from http://reliefweb.int/report/occupied-palestinian-territory/information-technology-breaks-barriers-between-palestinian.
United Nations Development Program. (2016). Education Above All Increases Investment in a New Generation of Leaders in Gaza. Retrieved from http://reliefweb.int/report/occupied-palestinian-territory/education-above-all-increases-investment-new-generation.
