Difference between Indirect Spend and Goods-Not-for-Resale
Indirect spend and GNFR are two terms that are often used in the context of business expenses, but they refer to slightly different things.
I was introduced to the term GNFR (Goods-not-for-Resale) when my career brought me to the retail sector, after a number of years in manufacturing. I was familiar with the term indirect spend but had never heard the term GNFR. So, after more than a decade in retail here is my simple explanation.
Indirect spend is not directly tied to revenue
Indirect spend refers to expenses incurred on goods and services that are not directly related to the production or sale of the main products. These can include items such as office supplies, marketing materials, and transportation costs. Indirect spend is also often referred to as “overhead” as it is not directly tied to revenue generation.
GNFR is integral to revenue generation
GNFR, on the other hand, refers to items that a business purchases for its own use rather than for resale to customers. These can include items such as operational supplies, fixtures, equipment, and systems that are used in the stores. GNFR items are integral to revenue generation. For example, a grocery store cannot sell Ice Cream without their freezers.
GNFR is a component of Indirect Spend in the retail environment
Both GNFR and indirect spend are considered non-core expenses. Indirect spend encompasses all spend associated with the operation and administration of the business and includes both products and services. GNFR spend is limited to those components that directly impact the ability to sell merchandise.
In summary, indirect spend refers to non-core expenses incurred on goods and services that are not directly related to the production or sale of the main products, while GNFR refers to items that a business purchases for its own use rather than for resale to customers.
Continuing my series on GNFR next week
This is my first message in a new series focusing on GNFR. I hope you have found this useful as you consider the digitization of your supply chain. Next week, I am going to continue sharing additional information on GNFR and managing GNFR purchasing and Supply Chains.
Lumatrak’s PULSE software offers you tools that will help make sense of the chaos by connecting the processes, systems and communications supporting your purchases from the time of purchase to final delivery to your site.