Understanding GNFR’s Spend Impact Upon Revenue
GNFR spend is an area of supply chain management that often does not receive the attention it deserves. This is most likely due to the fact that its effects are difficult to connect directly to revenue. But this oversight is what can greatly affect a company’s bottom line by cutting drastically into profit margins. It’s a crucial area of spending that savvy organizations are starting to hone in on in order to cut spending and increase profits.
What Is GNFR?
GNFR (goods not for resale) refers to the various goods and services that are integral to a company’s operations. These goods do not factor into the direct cost of manufacturing a product or purchasing a finished good for resell, so they are considered indirect costs.
Examples of some of these items might include the following:
- Cleaning supplies used to keep the area clean for customers and employees so that goods can be sold
- Packaging that will be used to store or ship GFR (goods for resale)
- Store fixtures or manufacturing equipment that is necessary to sell or create the products
- Capital goods purchased for plant and equipment
GNFR Helps Sell GFR
The aforementioned goods are not necessarily just the physical items used to manufacture GFR; they can also be services or products that make it possible to sell your product. For example, credit card processing equipment, registers, scanners, and other sales tools are necessary to help you process transactions when selling your product. Cleaning and janitorial supplies are also necessary to keep the store presentable so that customers will continue to shop there. A safe environment for both customers and employees is also a necessary investment of GNFR.
Consider also remodeling supplies needed in order to create the best shopping experience for customers. Having an attractive building in a good area for shoppers to enjoy visiting is vital to your business and word-of-mouth advertising. Having attractive fixtures enhances both the shopping environment and the look of your products.
Everything possible must be done to keep your customer base coming back and telling their friends and family about their experience. In fact, a fresh shopping experience can increase revenue by a few percentage points. Target’s CEO, Brian Cornell, has been quoted as saying their remodels should increase their sales anywhere from 2-4%.
Reducing Loss During Various Projects
Of course, the repercussions must be considered before remodeling projects begin. Although the finished product will eventually boost sales, they also decrease sales during the process.
The businesses below are open during their remodel projects:
There are several reasons for lost revenue during remodels. For one, customers have a hard time knowing whether or not the business is still open during a remodel. The entrances may be blocked, and workers might be coming in and out of the entrance. But even if they do realize it is open, most people don’t want to shop amid dirty construction, especially in certain businesses such as dining establishments or grocery stores.
To avoid as much loss as possible during the remodeling process, you should limit the time spent on the project. Any construction delays, which extend the time of the project, decrease potential revenue. Companies will usually plan their projects to coincide with their seasonality; beginning the construction projects during their revenue’s lowest point would have the lowest risk of loss. It’s a major issue if the construction project extends into the holiday shopping season as Q4 means everything to most retailers.
Other retailers are forced to completely shut down their operations during a remodel. These companies will not have any revenue associated with those locations during this time frame. Therefore, these companies have even more on the line regarding their remodel timeline. They need to limit the construction process as much as possible so that they can begin showing a return on their investment as soon as possible.
The same can be said for additional new locations. The sooner they open up for business, the sooner that investment can be realized.
In general, the faster the project is done, the less risk of lost revenue for your company.
GNFR is a necessary expenditure line in any business, but managing it effectively can make all the difference in the world increasing a company’s revenue. Projects such as remodels can greatly increase your sales once they are completed, but reducing the time they take is necessary and can greatly decrease the risk for lost revenue. If revenue is cut in half during the construction, you want to decrease the time that revenue is cut. Reducing from 10-week projects to 5-week projects could show a 150% increase in sales during this 10-week time period.
Lumatrak provides a full range of real-time OTIF visibility tools to help you better manage supplier and delivery performance from order to the final mile of your indirect goods supply chain. Provided in the cloud through its Software-as-a-Service (SaaS) offering and already connected to vast number of manufacturers and contractors, Lumatrak’s solution can be quickly implemented to complement and enhance any ERP, Strategic Sourcing and Procure-to-Pay systems.
To learn more about how a better GNFR-delivery management solution could save your company both time and money, contact the team at Lumatrak today.