During the past few years, selling, general and administrative expenses (SG&A) have been growing faster than sales growth, resulting in unsustainable margin compression. The focus of current savings initiatives has been on product price reduction, rather than a holistic focus on price, consumption and specification. There has been a lack of transparency and a consolidated Group view of costs, resulting in a misaligned approach to managing costs across the Group.
We have set out to leverage Group scale to target spend reduction across indirect procurement categories through price and volume reduction. By creating visibility of every aspect across the Group to identify opportunities for savings, we have identified an addressable indirect spend baseline of R10.4 billion. We applied local and global benchmarks and identified savings opportunities between R0.6 billion and R1.5 billion across cost packages. While savings opportunities have been identified, targeted spend and culture initiatives need to be developed and executed to realise and sustain value. We will address this by:
a. Immediate execution of quick wins and kick off value targeting by:
b. Enhancing the Group’s integrated spend management capability by:
We will implement new approaches and new ways of working to reset the cost structure by:
By maintaining disciplined control of our expenses,we are able to create efficiencies, thus freeing cash to reinvest in price and customer experience and provide the business with fuel for future growth.