Assessing the overall SG&A Performance is allowing to identify the Stakes per Function as well as by End to End Process and the Drivers which should be leveraged, then General Management must select One Transformation’s Strategy:
- Efficiency or Cost only: this strategy was clearly the one followed by most companies since 1980’s which generated a lot of jobs transfers from high costs to low costs Countries through Offshoring and Outsourcing. In a second step after getting the labor arbitrage benefits the management launched either Business Process Reengineering or Continuous Improvement programs to further reduce Costs.
- Effectiveness or Value Added only: this strategy is relatively theoretical because even in high margin markets Companies are not accepting to forget Costs reductions. Decisions should be always based on robust Business Cases.
- Efficiency and Effectiveness or Competitive Costs and Value Added: this strategy is the most mature and balanced one because to apply it CEO’s must challenge at every level “Services to Costs” based on KPI’s. The sustainability of this strategy is achieved by integrating Continuous Improvement into the DNA of every Employee and Associate.
Are you willing to improve the SG&A Services to Costs significatively ?