Summary
To adapt to a new, more challenging market, ICA underwent a significant cost reduction program and re-organization. As part of this initiative, ICA approached PIR and Aurentor for assistance in reducing their indirect spend.
The project had an immediate positive effect on the bottom-line result and will in total reduce ICA’s indirect spend by 300 MSEK. This initiated a change in how ICA works with indirect procurement by introducing category management and instilling confidence when negotiating with suppliers, thereby shifting the scale in favor of ICA.
Background
In the face of shifting market trends, with premium assortments and stores giving way to low-cost and budget options, ICA found their position challenged. To remain competitive while managing the inflations raising costs of interest and supply, the company needed an overarching cost transformation.
One of the identified cost transformation opportunities was within goods not for retail where ICA hoped to reduce their addressable spend by 5-10%.
This target was highly ambitious and demanding, challenging the entire organization to find cross-functional cost opportunities within a decentralized structure. Many tough decisions had to be made with a top-down perspective, while they at the same time needed to stay true to the company's core entrepreneurial values, with bottom-up ownership. Additionally, the company underwent a major reorganization during the cost transformation, which increased uncertainty and raised the decision-making threshold, making cost prioritization difficult.
