Work your assets harder to drive value
Fit for purpose
You’ve invested millions — possibly billions — in IT, supply chain logistics and the assets in your portfolio. But are these strategic assets supporting your growth strategy? Without constant vigilance to maintain their quality and keep them aligned with strategy, assets quickly degrade — leaching value from your organisation.
To sustain and create value, you need to:
- Focus on the sustainable efficiency of your IT
- Grow margins with supply chain efficiency
- Make sure your portfolio supports strategic growth
Focus on the sustainable efficiency of your IT
The IT function is a material part of the cost structure in most organisations, making it a key target in any cost cutting exercise. But in a bid for greater efficiency, organisations often make changes that deliver short-term savings, or sometimes just the illusion of savings, but result in medium and long-term pain.
In responding to the mandate to reduce costs, CFOs need to work closely with the CIO to ensure savings deliver sustainable improvements in the IT cost structure.
“Rather than being reactive, and only divesting to pay down debt, you need to take a more strategic, proactive approach, treating divestments primarily as a means of portfolio optimisation and making the best use of available capital.”
Graeme Browning, Oceania Managing Partner, Transaction Advisory Services, EY Australia.
Grow margins with supply chain efficiency
Archaic supply chains are reducing consumer product margins by up to 20%. It’s time to take another look at your end-to-end supply chain and catch up with the rest of the world.
Locally, our historical supply chain infrastructure is relatively inefficient. If your supply chain has not been scrutinised for a few years, you can assume 15-20% waste in either a component of, or the end-to-end supply chain itself from: rework, excess inventory, product obsolescence and inefficient network design.
Make sure your portfolio supports strategic growth
In a lower-growth environment, some organisations have fallen into the trap of letting short-term cost cutting tactics get in the way of long-term growth strategies. CFOs need to boldly reassess their portfolios and redeploy capital that is not generating an adequate return or contributing to strategic goals.