Reduce SG&A Costs
SG&A costs often grow faster than revenue. A five-element framework shows where the savings sit by function and how to cut overheads without slowing growth.
Selling, general, and administrative (SG&A) costs encompass a wide range of expenses essential for administration, including salaries, rent, marketing, and other costs. In a volatile macroeconomic environment marked by rising energy costs, supply chain disruptions, and increasing labour costs, companies face significant pressure to maximise efficiency. Additionally, geopolitical uncertainties and rapid technological changes heighten the necessity for careful SG&A cost management to maintain competitiveness and foster sustainable growth.
IDENTIFYING SG&A SAVINGS BY FUNCTION
Efficient processes and structures are critical in addressing these challenges. By analysing cost distribution, companies can pinpoint areas for potential savings. The following illustration highlights the potential savings achievable by function.
Building on this analysis, we collaboratively define the company’s purpose and integrate it within the organisation. We jointly develop the appropriate strategy, ensuring that the purpose is not merely a statement but is genuinely perceived as meaningful and actively embodied.
SYSTEMATIC COST IMPROVEMENT WITH THE H&Z APPROACH: A FIVE-ELEMENT FRAMEWORK
The H&Z approach is a structured method recommended for systematically tackling improvements, based on five key elements:
- Align on baseline: Establish a common baseline to consistently evaluate cost structures
- Utilize H&Z benchmark database: Leverage a comprehensive benchmark database for performance comparisons
- Expert panel survey: Conduct expert surveys to incorporate industry-specific insights and best practices
- Calibrate with H&Z functional experts: Coordinate with H&Z functional experts to accurately interpret and adjust the data
- Derive improvement potentials using statistical methods: Use statistical methods to identify concrete approaches for cost savings and efficiency increases
This structured approach not only helps companies respond to current challenges but also proactively enhances their resilience and effectiveness for the future.
