Comprehensive SG&A Cost Reduction Program Case Study

Large office equipment, solutions and service provider with operations in the Americas and Europe
Experienced three years steady revenue decline; despite reduced costs, reductions had not kept pace with revenue; over-capacity in country operations remained
As SG&A expense exceeded 37% of sales, overhead was higher than other industry player, and higher than the company’s 30% target
Asked AlixPartners to develop and manage an aggressive company-wide SG&A cost reduction program to achieve benefits in excess of $50M

Developed and coordinated a comprehensive program across geographies and functions, focusing on five major workstreams:
- Simplified Organizational Structure Consolidated sales and service, reduced management structure and standardized budgeting and ops reviews
- Restructured Country Operations Implemented target-selling, de-layering, early retirement and wage negotiations, as well as new legislature-based layoffs
- Improved Field Productivity
- Rationalized field technicians, enhanced dispatch systems and consolidated technical centers
- Restructured Backoffice Support Implemented tiered support, outsourced collections and parts planning, redesigned billing and reduced bad debt
- Reduced Non-Core & Other Costs Rationalized field offices and distribution centers, increased third party purchases and divested Canadian operations

Smaller unified management team initiated the transition toward an entirely-new business model:
Focused externally rather than internally
Differentiated customer options and service levels based on customer segmentation
True discipline around simplified, standard processes leveraging Oracle automation with a propensity to outsource non-core
Fully re-budgeted financials and redesigned ops review process to monitor financial and operational performance and triage initiatives
Upon AlixPartners departure, published SG&A expenses were 11% less than the year ago period ($40M completed to bottom-line), other initiatives remained on-track to achieve total reduction of $92M ($62M in Americas and €30M in Europe)

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