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Goods Not For Resale — Everything You Should Know
- GNFRs take and make up to 30% of a business’s operating costs yet it is often ignored and overlooked.
- GNFR is more important than you think and it is quite hard to manage, but it can give you more profit.
- GNFR procurement has many sets of challenges because of the diverse characteristics GNFRs have.
GNFR, the abbreviated term for Goods Not for Resale, is a term that any procurement managers or business owners might have heard of. Among the items procured for an organization, GNFRs are probably the least talked about but at the same time, can have a substantial impact on your organization’s overall procurement.
For this article, we will discuss what GNFR is and its importance. Additionally, we will take a look at its influence on procurement.
After reading this article, you should have a better understanding of what GNFR is and how managing it can be beneficial to an organization.
In general, “goods not for resale” (GNFR), sometimes known as indirects or “non-product related” (NPR), refers to products and services that are not sold directly to the end user. Historically, GNFR procurement has frequently been seen as what a business needs to operate rather than as what it needs to sell.
However, although GNFR spending often makes up 20–30% of a business’s operating costs, it is frequently seen as being less significant and having less of an impact on the success of the organization. As a result, it is not frequently evaluated in the same way as its GFR (Goods for Resale) cousin, and it is frequently managed by a team that is understaffed and may not always include the organization’s top procurement experts.
Simply put, GNFR stands for the many products and services that are essential to a business’s operations. It’s a crucial step in the purchasing process for customers but rarely gets enough attention, despite its importance.
It would be an understatement to suggest that maintaining an accurate record of GNFR purchases is crucial. Due to a missed deadline or ordering blunder, failing to track a GNFR purchase or shipment for a major chain with numerous outlets could wind up costing tens or even hundreds of thousands of dollars.
Despite this, a lot of businesses choose not to take any steps toward risk detection, reduction, or avoidance. Although some people manage their GNFR by sticking to a rigid budget, the truth is that this approach still does not address the problems that could result in lost revenue. Profitability is impacted if operating costs are high. Businesses lose money if they don’t open on time. Remodeling a store that takes longer than it should result in lost sales. If there is a significant amount of excess inventory, the indirect expense is too high and needs to be reduced.
Savings in this area have a lot of promise. Organizations can anticipate lower product and administration expenses as well as a more efficient system overall if they take the appropriate actions to minimize risks related to their GNFR.
The Shiftin the Importance of GNFR
Being transferred to the GNFR department might feel like a step back if you were working in procurement at least ten years ago. It has now, however, been pushed front and center and to the core of every credible organization and business due to shifting attitudes in the industry.
The importance of GNFR has doubled with the advent of retailtainment and experiential shopping as firms transform stores from purely stock-holding locations into places where customers can engage in experiences. The need to organize expensive light shows, installations, and in-store theater, has helped GNFR procurement.
GNFR in Procurement
However, in procurement, the phrase is frequently used to classify and manage the many sorts of goods and services that an organization purchases for its internal operations, rather than for resale to customers. “GNFR” still stands for “Goods Not For Resale” in this sense.
Here is how GNFR is relevant in Procurement:
To simplify the purchase process, commodities, and services are frequently divided into several categories in procurement. One such category is GNFR, which includes goods that are necessary for an organization to operate but are not immediately connected to the goods or services the company provides to clients.
2. Supplier Management
To support their operations, organizations must purchase a wide range of goods and services. Office supplies, maintenance tools, IT gear and software, cleaning supplies, clothes, and other items can be included. For these non-resale commodities, GNFR procurement involves locating dependable suppliers, signing agreements, and managing connections.
3. Cost Management
A crucial component of cost management is GNFR procurement. Organizations can cut expenses by using effective procurement procedures when buying necessities for their internal operations. Bulk purchase, vendor consolidation, and price negotiating are some of the techniques used in this.
4. Inventory Management
Managing inventory levels for products like office supplies and maintenance equipment is part of effective GNFR buying. Keeping inventory levels in check helps to prevent shortages and overstocking, which uses up working capital.
5. Supply Chain Efficiency
The GNFR procurement sector contributes to the effectiveness of the supply chain just like other procurement categories. In order to avoid disruptions in the organization’s regular operations, it is crucial to guarantee a consistent and reliable supply of non-resale items and services.
6. Planning and Budgeting
Budgets are allotted by organizations for a variety of expenses, including GNFR. In order to ensure that necessary goods and services are bought without going over budget, procurement teams must stick to these budgets.
7. Compliance and Sustainability
GNFR procurement may entail adhering to particular rules or specifications pertaining to the purchase of particular commodities (such as ecologically friendly products) or collaborating with a variety of suppliers to promote sustainability and CSR objectives.
The Challengesof GNFR
Dealing with GNFR Procurement can present several challenges due to the special characteristics of these items. Here are some common challenges associated with GNFR Procurement:
1. Diverse Needs and Categories
GNFR items include a broad range of goods, from office supplies to specialist machinery and services. It can be challenging to manage the various demands and categories under the GNFR umbrella because each category may call for a distinct sourcing approach and supplier network.
2. Supplier Management
GNFR items sometimes involve several suppliers for various categories, making it difficult to manage these connections. It can take a lot of resources to maintain consistent quality, negotiate prices, and guarantee on-time deliveries from different vendors.
3. Quality and Consistency
It is essential to maintain uniform quality across all GNFR goods because even small differences might have an impact on internal operations. It can be difficult to manage quality control and hold suppliers accountable, especially when working with a broad supplier base.
4. Budget Constraints
Budget restrictions and the need for high-quality GNFR items must be balanced, which is an ongoing challenge. Finding the ideal balance between cost reductions and ensuring that the required items match operational requirements is a challenge for procurement specialists.
5. Sourcing Complexity
Due to their uniqueness or restricted availability, some GNFR items can need specialist sourcing techniques. Longer procurement cycles and consequent delays in getting essential supplies can result from this complexity.
6. Demand Forecasting
It can be challenging to predict the demand for GNFR goods, particularly when consumption habits change or when new operating requirements appear. Stockouts or excess inventory can result from either underestimating or overestimating demand.
7. Inventory Management
For GNFR products, efficient inventory control is essential to avoiding stockouts and high carrying costs. Finding the ideal balance between keeping stock levels adequate and avoiding overstocking can be difficult.
8. Sustainability Compliance
It can be difficult to make sure that GNFR products adhere to compliance requirements and sustainability goals. It could take more work to find ecologically friendly products or to follow regulations.
9. Technology Integration
It can be challenging to integrate GNFR procurement processes with technological tools like inventory management systems or e-procurement platforms, especially when these systems must interact with other internal systems.
10. Approval Processes
GNFR items often require approvals from various departments or stakeholders within the organization. Coordinating these approval processes can be time-consuming and may introduce delays in procurement timelines.
In conclusion, GNFR procurement involves the strategic management of products and services that a company needs for its internal operations but that are not meant for resale. GNFR is obviously a complex topic that needs a lot of attention. The first step in tackling the risks related to indirect spending is having a solid understanding of GNFR. With this information in hand, businesses can go on to recognize, avoid, and mitigate risks associated with lost sales, missed deadlines, and excess inventory. Efficient GNFR procurement contributes to cost reduction, operational effectiveness, and organizational success.
What is GNFR?
In general, “goods not for resale” (GNFR), sometimes known as indirects or “non-product related” (NPR), refers to products and services that are not sold directly to the end user.
What is GNFR in Procurement?
In procurement, the phrase is frequently used to classify and manage the many sorts of goods and services that an organization purchases for its internal operations, rather than for resale to customers. “GNFR” still stands for “Goods Not For Resale” in this sense.
Why is GNFR important?
Organizations can anticipate lower product and administration expenses as well as a more efficient system overall if they take the appropriate actions to manage their GNFR efficiently.
About the author
My name is Marijn Overvest, I’m the founder of Procurement Tactics. I have a deep passion for procurement, and I’ve upskilled over 200 procurement teams from all over the world. When I’m not working, I love running and cycling.