L4.4 Examine the impact of the not-for-profit or third sector on proc. or supply chain activities

Question 1

Objectives and principles of the not-for-profit or third sector
*dependent on the nature of the TSO
1. 4 for Charities
2. 5 for Buying groups

Answer 1

Charities
1. raise AWARENESS of a cause
2. attract DONATIONS and funding
3. ensure CONTINUITY of support
4. engage STAKEHOLDERS
- the interaction between the TSO and stakeholders can STRENGTHEN the cause

Buying groups exist to benefit its members
1. negotiate the BEST PRICES for members
2. provide support to members through ADVICE on relevant issues and matters relating to the buying group and associated trades
3. share BEST PRACTICE, CONTACTS and INFORMATION
4. keep membership FEES/levies as low as possible
5. attract MORE MEMBERS -> more likely to negotiate competitive prices

!! Buying groups aim to save money for their members through ECONOMIES OF SCALE.
eg. Woldmarsh Producers, one of the UK’s leading farmer buying groups - agricultural items like fertiliser, chemicals, seeds, fuel and electricity

Question 2

Regulations that impact on proc. and supply chain activities in charity and third sectors
1. Charities Act 2011
2. Charity Commission

*all charities are regulated

Case study: A Christian charity’s bank account was frozen in inquiry over ‘substantial unexplained expenditure’

Answer 2

The Charities Act 2011 regulates both aspects that have to be satisfied by charities
1. A BENEFIT aspect: charities must…
- have a purpose that must be beneficial to the COMMUNITY/REGION it works in <- must be capable of being proved by EVIDENCE and not based on personal views
- any harm that results from the purpose (to ppl, property, environment) must NOT OUTWEIGH the benefit
2. A PUBLIC aspect: charities must…
- benefit the public in general, or a SUFFICIENT SECTION OF THE PUBLIC
- not give rise to more than incidental personal benefit (incidental =necessary result or by-product of carrying out the purpose)

> > {Charities Act 2011 also details the responsibilities of charity TRUSTEES, provides rules on charity FINANCES, etc. to ensure charities operate transparently and in accordance with public trust.}

!! In the UK, charities with a yearly income exceeding £5000 have to be REGISTERED. Other countries will have similar or equivalent rules relating to charities.

The Charity Commission is an INDEPENDENT body that reports to the govt {and registers and regulates charities}
- role: to ensure the FAIRNESS and GOOD CONDUCT of all registered charities
- empowered to…
1. restrict the operations of the charity
2. appoint new trustees (=ppl responsible for governing/managing the charity)
3. suspend a trustee
4. appoint a new manager
5. FREEZE the BANK ACCOUNT

Question 3

Do the same regulations apply to volunteers and employees in the charity sector as
they do in the private sector?

Answer 3

Yes, for areas like ethical behaviour, health and safety, ISO standards etc.

(see L4.3 6 generic regulations and standards)

Question 4

Need for procurement and supply activities to align with org. CONTEXT MISSION and objectives
1. What is an organisation’s context mission?
2. 5 common regulations for TSOs
3. another main difference between TSOs and public/private sectors
4. a common procurement problem in TSO management

Answer 4

1. Context mission = the PURPOSE of an org.
   eg. for a cancer charity, finding ways to fund cancer treatment

• procurement should be regulated regardless of the sector; CIPS Code of Conduct can always be followed as a guide to ensure buyers act transparently and show accountability in all actions
• like the private sector, TSOs have no official proc. regulations, but should exercise GOOD PRACTICE at all times
• like the public sector, TSOs should offer the best value and have cost effective processes, as the money has been entrusted to them to promote social, environmental or cultural causes

2. Common regulations for TSOs
   i) Achieving best value for money
   ii) Conducting ethical procurement
   iii) Promoting sustainability
   iv) Benchmarking to ensure fair pricing
   v) Supply chain mgmt
3. TSOs frequently receive GIFTS in the form of DONATIONS of goods/money
   - b/c ppl or org.s want to help to be seen to help
   - in public/private sectors, this is frowned upon and donations have to be disclosed to AVOID CONFLICTS OF INTEREST
4. Problem of DISPOSAL
   - charity shops eg. Oxfam, British Heart Foundation, Cancer Research -> require sorting valuable, saleable items from unsellable junk
   - disposal is full with REGULATIONS and DRAINS the LIMITED RESOURCES of a TSO

• DOCUMENTATION is the key to TRANSPARENCY in TSOs