BEING OBSESSED ABOUT COST SAVINGS AND EFFICIENCY
We have realised R387 million in savings this year, reflecting our drive in instilling a culture of cost savings.
Unlocking costs and cash
In 2020 we introduced a culture-change initiative aimed at ensuring a more systemic group-wide approach to driving efficiencies across the business, and to enhancing the quantity and quality of projects that are being identified and tracked. As part of this initiative, we introduced clear process steps from identification to realisation of savings, improved internal transparency and strengthened our accountability measures to ensure appropriate ownership of expenses. We have set up revenue management capabilities to help us identify cost savings and efficiencies and to create a pipeline of opportunities across the business units, and we prioritised the need to improve our SKU rationalisation by developing an accurate product costing model informed by activity-based costing.
We have made further progress this year in embedding this cost-savings culture across the group, delivering R387 million in savings, short of our target for the year due to inflationary pressure in procurement. Our revised accountability matrix is helping to ensure greater ownership in delivering the targeted savings, creating a healthy tension between cost owners and business owners, aided by introducing appropriate incentive structures to drive performance and ownership.
We have been further strengthening our central revenue management capability within each of our business units, delivering positive results in Groceries, Beverages, and Snacks & Treats. Our new trading terms, designed to provide stronger pay-for-performance incentives and ensure compliance with new legislation, are showing encouraging signs of delivering results. We have continued to deliver valuable costs savings and reduce complexity through further portfolio optimisation and SKU rationalisation, primarily in Groceries, Snacks & Treats, and Beverages.
PERFORMANCE SUMMARY 2022
- R1,4 billion in cost savings realised over the last three years
- Rejuvenated costs savings culture with launch of Every Tiger Counts initiative
- Revenue management initiatives implemented, delivering R300 million cumulative benefit since inception
- Digitalisation strategy in-place and driving decisions
- IT spend moves closer to benchmark levels and delivering on commitments
Opportunities for improvement
- Strengthen the procurement function and position as a competitive advantage
- Continue to deepen our cost-efficiency culture change
Delivering digital transformation
Delivering digital optimisation, and providing integrated IT and information solutions, is an increasingly significant source of competitive advantage and critical to realising our vision of developing an effective, best-in-class supply chain. We have completed the development and approval of a comprehensive digital strategy that defines the key areas of focus for the business and serves as a comprehensive framework and roadmap for our business initiatives over the coming years. Through this process we have a clear view of the required initiatives and a process for prioritising them, while ensuring that the initiatives all align to deliver business value across the enterprise.
Thus far our technology investments have focused on five key areas: operational efficiency, automation, data and analytics, revenue optimisation, and security. Our new customer service and logistics centre programme has enabled more accurate stock transfers, while our pallet-tracking solution has improved traceability throughout the order to deliver process. We have delivered efficiency improvements by reducing the number of systems used for the financial close process, as well as through automatic account reconciliation, and we have strengthened our revenue management and growth decisions through improved analytics on our customer and sales data. Deployment of the recently introduced distribution requirements planning system has improved accuracy and efficiency in allocating stock across our warehouse distribution network and reduced dependency on external service providers.
Looking ahead, we have approved new projects to improve operational efficiency and increase automation across the supply chain including warehouse management; demand planning and forecasting; safety, security, and environmental management; food quality monitoring and reporting; integrated budgeting and reporting and forecasting capability; and procurement operations management.