SG&A reduction is often the primary lever for competitiveness plans because it concerns indirect costs, which are perceived as less important for operations.
Assessing and defining the organization’s vision represents an essential stage in a SG&A reduction plan. It leads to an examination of the opportunities and the value of sales and administrative functions compared to operational expectations.
After the assessment, and following the identification of optimization levers, the development of a transformation plan begins by determining the company’s level of ambition in terms of results and deadlines, and depends on:
- Urgency of the need for transformation, particularly in relation to the organization’s economic situation and competitive pressures
- Capacity and will to act quickly
- Gap between the current situation and the target
The transformation plan includes actions whose effects take place in different time-frames:
- Short Term
- Medium Term
- Long Term