Facing record-breaking inflation levels, labor shortages, soaring fuel prices, and a volatile supply chain—business leaders in operations and finance are charged with the task of protecting profits even after already clamping down on spending whenever possible. With operational cash flow uncomfortably tight, retail organizations are gearing up to tackle essential site operations supplies and goods not for resale, or GNFR, as a strategic source of value.
Most of the focus organizations dedicate to spend management goes into the direct costs of merchandising their product or providing a service. While this should be the primary focus, oftentimes what goes unnoticed is the other 15-30% of indirect spending and GNFR (goods not for resale) that any facility or asset-intensive organization needs to maintain its operations. This category is historically under-addressed because it is sometimes difficult to reach, control is often decentralized, data hard to collect, and visibility extremely limited.
This approach leaves organizations unable to consolidate and leverage purchasing power and it also creates additional exposure to risk due to the impact that the supply chain and geo-political climate have on an organization’s bottom line. Recent innovations have increased the capabilities of facilities and supply chain management professionals to tackle GNFR with the same rigor as direct materials. What previously was a very local, site-based decision can now be managed centrally and used as a tool to support business processes and align organizational strategies.
Areas To Assess for GNFR and Indirect Spend Optimization
- Store safety. Consumers are making choices about where they shop based on how stores are adopting COVID safety measures – demonstrating an understanding and compliance of the measures by adapting stores appropriately should be front of mind for retailers. Those who put systems in place to ensure customer safety is a priority will thrive – whether it’s implementing efficient movement, organizing clear queuing, or clearly communicating sanitization levels and procedures in store, customers need to feel safe coming through your doors. Having the right equipment and training your workers in safety practices can go a long way to keeping them and customers protected from injury.
- Sustainability. Going green will be a major draw for new generations of consumers. New Corporate Social Responsibility (CSR) legislation is coming soon, but it’s well worth adopting the mindset that CSR is part of the customer proposition. Green transformation correlates with high efficiency, and proper management of a network of suppliers and distribution centers to help reduce waste in the supply chain. Being sustainable is a commitment to human environmental health. Major retailers seek out new systems to help them deliver the products, supplies, and services needed in taking ownership of CSR and sustainability spending.
- Store maintenance. Managing store maintenance as effectively as possible is a difficult task in today’s supply chain environment, especially when trying to strike a balance between proactive and reactive maintenance. Maintaining an ideal material inventory is key to an effective facilities maintenance plan. A savvy material manager minimizes storage requirements and waste while ensuring that critical spares and essential supplies are available when needed. Having the right people and processes around GNFR is critical to facility management. This means establishing re-ordering plans and projecting inventory levels to hold as safety stock. It requires the analysis of spend data and reviewing how efficiently your suppliers operate to ensure gains are made from parts management.
- Checkout and point of service. Everywhere you look retailers are offering a swifter, more streamlined, safer payment experience. Improving efficiency here offers a boost to customer experience. That may mean cutting queue length or investing in today’s increasingly innovative touchless payment systems.
- Delivery. Retailers must offer their customers optimum service in the delivery stage to maintain their preferred status by customers. For retail leaders it comes down to addressing pain points, like where to store repair parts once delivered on site so the technicians have everything in one place when they arrive. New partnerships and even supply chain systems should be leveraged to optimize the last-mile delivery stage around GNFR and indirect materials.
- Brick and mortar construction. Revising the way you run store builds and refurbishments could save time and money. Instead of focusing on price, you could look at market benchmarks and supplier knowledge. Taking a more systematic sourcing approach and collaborating more closely with suppliers are two ways that could dramatically increase efficiency and reduce build time.
- Back office. Attracting and retaining the best talent is another crucial issue and a great example of the power of GNFR: the days of outsourcing as a cost reduction may well be over, while employers are coming to understand the power of creating appealing, comfortable working conditions to support hybrid and onsite workers alike.
Where to Get Started
Gain greater supply chain visibility and control by expanding the scope of your addressable spend to include essential site operating supplies and GNFR. SDI has 50+ years of indirect supply chain expertise. Our depth of category knowledge empowers you with market intelligence to get more spend under your control. We work in a collaborative process with your team to prioritize specific areas of spend and identify which performance indicators are impacted. We then deliver a phased strategic sourcing plan, mitigating risk by leveraging our vetted network of supply partners and implementing intelligent sourcing automation. The ZEUS digital supply chain platform creates critical transparency to anticipate demand, respond quickly to disruptions, and better identify savings opportunities.
To learn more about SDI’s solutions for essential site operating supplies and GNFR, contact us today.