Understanding the GNFR Supply Chain
GNFR supply chain optimization is one of the keys to the future of big business. GNFR spend varies widely depending upon company type. As opposed to a service firm, such as one specializing in accounting, or a marketing firm, a retailer incurs a significant GNFR spend. For those companies with a significant GNFR spend, one of the biggest strides that can be made to cut costs and maximize profitability is increasing the management of the GNFR supply chain.
What Is a GNFR Supply Chain?
A GNFR supply chain is the sequence of processes involved in the internal distribution of goods purchased that fall under indirect spend. This includes all of the different category buyers, suppliers, and project types that keep the business operating but don’t necessarily contribute directly to revenue.
When opening a new location or remodeling an existing location, it is extremely important to implement the right processes to ensure that the right goods are shipped to the right destination so that they arrive on time. Your supply chain makes sure that your flooring tiles arrive at the store before your shelving units, as you can’t install your shelving units if the floor has not been finished.
The Weak Link in the GNFR Supply Chain
The weak link in the GNFR supply chain is that many businesses don’t make it a priority. It is often viewed as less important to the well-being of an organization than the GFR supply chain. The revenue side of the business is the primary focus and receives almost all the attention and funding. “What are we doing to drive business?” stands in stark contrast to “What are we doing to manage costs of business operations?” The individual purchases are seen as small as well, so there is deemed no need to track a $5 purchase, but it’s a mistake when that $5 purchase needs to made 1,000 times.
Also, for these reasons, the primary delivery tracking and analytical tools usually in place rely heavily on internal teams (procurement/architect/design engineer/store planner/etc.) tracking all of these purchases manually. Manual tracking with spreadsheets creates its own issues, such as spreadsheet entry error, siloed information, and Excel line limitations, to name a few, but all of these issues are escalated exponentially when there are hundreds, if not thousands, of projects.
Optimizing Costs in the GNFR Supply Chain
These are the areas in which having systems available to thoroughly examine these items on a consistent basis can mean the difference between significant profit leaks and the ability to plug these leaks. Making sure items are not being lost and tracking all deliveries by OTIF% can regularly plug the drip of profits.
The exact solution will vary slightly with each organization, depending on the available resources and data, but the main solution is based in execution, analysis, and strategy. Where some companies fail is that they do not treat the GNFR supply chain the same way they treat the GFR supply chain.
Are these corporations using their size and scale to make sure they are getting the best prices? Do they track inventory regularly and research the most cost-effective products, services, and supply channels? Many retailers rely entirely on their general contractors to ensure all of their purchases are delivered on time. With this method, they are ensuring delivery of each product on a micro level, but they may not necessarily get the best price on all of these purchases, or they may have additional charges incurred on them from their contractors purchasing these products for them.
This is what needs to change. If your company has spent considerable time using the same system, or lack thereof, it may be beneficial and cost-effective to identify procurement leaks within your GNFR supply chain. Often, simply analyzing your past expenditures and looking for cost-cutting strategies can reveal large cost-savings opportunities.
Many times, this type of information may not even be available due to grouping all purchases under general contractor (GC). Team leaders or division managers should be utilized to closely examine and report on any frivolous spending in their areas. They should be given both specific and open-ended queries for their respective departments, and the data should be used to develop plans to maximize costs.
- Can any of the supply orders be combined for greater cost savings? For example, does someone in the department buy safety goggles from the local big box store when needed instead of combining the order with the neighboring departments that, when combined, can receive quantity cost savings? Or does each employee buy their own gloves with company money when one order could be made for the entire department?
- Is strategic sourcing software being used for maximum benefits? In other words, if it is being used, is it being used consistently?
The key to most of the cost-cutting efforts in either supply chain is the relationships built between suppliers and manufacturers. If a company can develop a long-standing commitment with a manufacturer, they are more likely to consider it in their best interest to optimize negotiations with that company, even if they are sacrificing their margins occasionally. Reputation and relationship are sometimes even a more important factor to your bottom line than the cheapest product if it can benefit your business in other areas. This is something that has to be weighed and analyzed as carefully as the actual cost and will ultimately be a decision that should fall under upper management’s discretion.
The GNFR supply chain is a factor that is commonly overlooked in company analysis, trends, and inventory, and it can be a source of expenditure leaks. As it is a direct savings to the bottom line, it should be a constant source of scrutiny within any company. Understanding exactly what lies under this umbrella is the key to making the wisest decisions and providing the most accurate data.
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.