Things are really heating up out there. And I don’t just mean the sweltering summer temperatures we’ve been experiencing lately in my area of the world.
I’m also thinking about how across almost every industry today, the business climate is hot with opportunity for merger and acquisition (M&A) activity. Executives are looking for business combinations to take advantage of undervalued assets.
This anticipated M&A activity is not business as usual, however. More attention is being paid to the value that can be gained from combining organizations and assets. Supply chain executives and managers should be aware that when M&A occurs, a big part of the challenges ahead will come from integration of processes and supply chain technology, as well as and finding value in the supply chain.
With the level of M&A activity expected to rise, supply chain integration is a key value-driver. We often refer to "supply chain integration, "but what does that really mean? I think we use the phrase ‘supply chain integration’ so much that we might have forgotten what it actually means. When we over-use a phrase like this, it becomes jargon, and once in a while in this blog, I examine common business jargon we use all the time and dig deeper into what it really means.
End-to-end, a supply chain is made up of six processes – Plan, Buy, Make, Move, Store and Sell. Integrating supply chains for the purpose of creating a merger or acquisition involves putting these parts together, renewing the way we define "supply chain integration."
Integration calls for planning, such as using benchmarking assessments, organization or re-organization of the processes, and change management as required. Not only do supply chains have to work end-to-end, but also create value and integrate smoothly with other businesses as they are combined together.
In his white paper, Integrating Supply Chains from Business Combinations, Gene Tyndall writes that, "Supply chains are increasingly finding themselves in competition with each other, rather than companies competing with each other. This trend in itself should motivate companies to get the supply chain integration right, make it sustainable, and create value."
As M&A becomes even hotter (as we expect it to do) and executives explore more business combinations, supply chain leaders will need to be ready to respond to the spotlight that’s sure to fall on the value and cost reduction that spring from supply chain. M&A means the supply chain can create new value for organizations, and planning for supply chain integration is a major part of creating cost savings.
Stay cool out there as we head into late summer … but keep hot on the trail for profitable growth.
Integrating Supply Chains from Business Combinations: Principles and Best Practices of Mergers and Acquisitions