Introduction and challenges
When optimizing SG&A, a manager must ask themselves several questions:
First, the starting point must be defined. What are we talking about in terms of services, quality of services and associated costs? Are some functions oversized? Are other functions undersized? Managers rarely have an accurate mapping of their SG&A organization or indicators to assess and compare against external benchmarks.
Second, the company’s requirements in terms of SG&A services must be described. The support, central and commercial functions have a cost, it is a question of validating the need in terms of service offering to meet operational and strategic challenges beyond the core responsibilities of certain functions, then adjusting the resources in line with ambition.
Third, performance levers must be mapped to ensure the functions’ effectiveness. Notably the degree of resource pooling and digitalization of processes, but also the matching of skills to needs. The question of make or buy is relevant for certain functions outside of the company’s core business.
Finally, there is the question of how, i.e. the construction of the roadmap to optimize SG&A, with the associated business case.
How we can help
With our experience in SG&A projects and functional expertise, Argon & Co supports clients in finding the right solution for their organization and their operational and strategic challenges.
- Diagnosis of all support, commercial and central functions (finance, HR, marketing/digital, legal, procurement, IT, commerce, real estate, etc.)
- Define the concept of SG&A by adopting a process-based approach and dissociating the activities by category (core activities, business partner, expertise and transactional activities)
- Establish an external and internal benchmark of SG&A efficiency by process (FTE, cost, quality, service level)
- Collect feedback and expectations from operational departments and identify key issues
- Collect the optimization levers that can be activated by process and quantify them in terms of benefits and accessibility
- Design a vision of the target organization of the functions
- Construct and qualify scenarios for organizational models by integrating the specificities and challenges specific to each function
- Define the target organization (roles and responsibilities, sizing)
- Analyze the impacts and build the business case
- Build the SG&A transformation plan