Optimizing Cost and Improving Processes
A multi-billion dollar global CMO had been established by the merger of a formerly public company and a carve-out from a European multinational. The resulting entity—with 8 business units, 26 sites around the world and 8,000 employees—had little visibility into its nearly $100mm in Corporate SG&A spend. Adding to the complexity, the Corporate SG&A spend depicted an 18% budgeted increase due to conflicting data sources, transfer of costs between departments and between Corporate and Business Units, along with unclear policies and processes.
Process & Controls Implementation
Budgeting & Forecasting Process Improvement
Our Accordion team drilled into the Corporate SG&A spend to generate insight into true year-over-year growth, present clear and concise findings, and improve process and cost management. Specifically, our work entailed the following:
- Collaborating with the Finance staff and department heads (across 10 departments) to establish a single source of truth for budget and actual data, requiring extensive reconciliation across dozens of data sets.
- Analyzing the cleansed data to focus on 3 controllable spend categories, in aggregate accounting for approximately to 70% of the total spend, which included headcount, T&E, and consulting.
- Creating cost bridges for each category of spend and each department, isolating true headcount adds from transfers, changes from revised GAAP policies, and redundancies.
- Developing an analysis structure that teased out these items as “normalizations”– this created cost comparisons that were apples-to-apples and more meaningful for the company.
- Highlighting the largest year-to-year normalized changes, enabling the team to identify and prioritize cost reduction opportunities.
- Designing a series of visualizations to simplify a complex cost picture and enable management to focus on the most relevant parts of the P&Ls to facilitate decision-making.
- Facilitated a seamless month end close process.
- Developed an understanding of the financial chart of accounts (“COA”) across regions in order to seamlessly integrate several disparate COA’s into one robust, well-developed whole company view.
Ultimately, our team identified over $10mm of cost reduction opportunities in a prioritized list based on size of opportunity, ease of implementation and potential for disruption, as well as key revisions to budgeted numbers. During the engagement, we created process maps for key areas, such as hiring practices, to ensure policy compliance and budget adherence, improve communication protocols, and enable real-time time cost tracking and cost reconciliation across departments.