Sales, Marketing & Growth - Strategy, Finance & Organization
How to achieve a value-driven
SG&A organization
Addressing SG&A costs as a lever to increase productivity and secure improved cash flow is a battle-tested measure to be competitive.
Overview
Companies must become more flexible and lean, as well as deploy capabilities to secure their competitiveness in both the short- and long term. Addressing SG&A costs as a lever to increase productivity and secure improved cash flow is a battle-tested measure to deploy.
Too broad cost cuts, cutting too little in the required areas, and not having a well-established plan are common malpractice seen in companies trying to address their SG&A spend. Such initiatives typically result in value destruction rather than value-creation.
It is all about maximizing value-add by increasing productivity. Therefore, companies should have a clear strategy and ambition for each SG&A initiative. Otherwise, it is highly unlikely to get to the required outcome. Thereafter, establish a data-driven and fact-based assessment of all resource and cost drivers, thus ensure enough insight into all true inefficiencies and opportunity areas. In this time of crisis, decisive and tough management teams should act and shift all the company’s time, money and resources towards value-creating initiatives, thus remove all that destroy value.