While both for-profit and not-for-profit supply chain share essential supply chain attributes such as visibility and integration, they differ significantly in various aspects. Remarkably, the most critical differences are visible in their operational purpose, performance metrics, and flexibility, as discussed below.
Purpose
Unlike the not-for-profit supply chain geared towards organizational performance, the for-profit supply chain is inclined to achieve monetary value to the investing company (Balaisyte et al., 2017). As such, not-for-profit supply chains are built for social value, contrary to the for-profit, designed to maximize competitiveness. For example, a charity organization will employ various means to ensure food supplies are delivered to a refugee camp, with just a few security and transparency considerations. However, a for-profit conglomerate uses a stringent criterion for choosing who and how to handle and deliver their products or supplies, based on calculated cost analyses that take into account factors such as competitors.
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Performance metrics
The two supply chains vary in their key performance indicators (KPIs). Since for-profit companies operate on the profit motive, the supply chain’s effectiveness will be judged based on their profitability and competitiveness. Thus, a good supply chain is that which best serves strategic demand or marketing interests. On the contrary, the not-for-profit supply chain is often driven by public interest or social value. Thus it will be judged on account of how it pleases the political or social motivation behind it. In this view, a good supply chain is one that delivers the most social good.
Flexibility
The two supply chains also significantly differ in their flexibility. Balaisyte et al. (2017) observe that for-profit are much more flexible than supply chains. The reason being corporate financing, which differs significantly as well. The general observation is that while for-profit companies are funded regularly (as defined by the management), most non-profit organizations receive funding from sponsors less spontaneously, for instance, twice a year (Balaisyte et al., 2017). That makes it impossible for non-profits to adjust to changes in the supply chain rapidly.
The organizational structure equally affects flexibility. For example, if a United Nations (UN) mission needs to change its supply chain partners, say commuter vans for its diplomatic clients, it will have to address the headquarters’ executive committee. The approval might require a not be implemented until the subsequent financial year, since it requires further endorsement from donors (Mangla et al., 2020). On the contrary, multinationals of the same size can quickly implement changes rapidly since their funding sources do not need external financing.
Notably, organizational structure mightily affects funding and decision making. In turn, the two mightily affects supply chains’ nature and operation in the profit and not-for-profit environments.
References
Balaisyte, J., Besiou, M., & Van Wassenhove, L. N. (2017). Cross-Sector Partnerships for Sustainable Supply Chains. Sustainable Supply Chains . 11 (8), 485-505.
Mangla, S. K., Kusi-Sarpong, S., Luthra, S., Bai, C., Jakhar, S. K., & Khan, S. A. (2020). Operational Excellence for Improving Sustainable Supply Chain Performance. Resources, Conservation, and Recycling, 16(2), 105 - 125.
