Mergers and acquisitions have been all over the headlines in 2015, which is a usually looked to as a positive sign for the strength of the economy. So far, 2015 has been the most active year for M&A’s since the Great Recession. Back in June, Investopedia listed the top 10 mergers and acquisitions for the year so far, and the deals listed alone totaled over $230 billion. If this trend continues, 2015 could be a record-breaking year.
Another contributing factor could certainly be the Federal Reserve’s repeated discussions about raising interest rates (despite ultimately deciding to postpone.) Our current low-interest-rate environment makes it an attractive time for corporations to grow through acquisition, and many want to take advantage before it’s too late. It’s hard to tell if this is the bigger motivator for the upswing in M&A’s this year.
(It’s worth noting that while big deals like these are up this year, middle-market mergers are actually down.)
Deals this big have an effect on consumers and business owners alike, but an often overlooked impact lies with the supply chains within the companies themselves. Improper supply chain management through a large merger or acquisition can negatively affect revenue, cost, balance sheet, customer service, risk management and compliance. With so much to manage, it’s easy to see why things go awry so easily when execution in the supply chain is not taken into account.
As Wall Street Journal contributor Foster Finley noted in a recent article,
Successful supply-chain mergers are distinguished by three critical aspects. They show an understanding of the unique nature of the new or acquired supply chains; the managers develop a common vision for the combined supply chains that reflects market needs and the company’s unique capabilities; and they create a clear transition path toward the new supply-chain structure.”
Finley also offered a number of suggestions on how successfully integrate supply chain management into any overall merger plan. Each business integration is unique, but there are a few staple considerations every business can at least take into consideration.
The most important thing to do before creating a supply chain strategy, is to understand each independent supply chain in as in depth a way as possible, this includes structures, capabilities, performance, investments, human resources, assets, support technology, supplier relationships, and any requirements specific to the customer or market.
Once each supply chain is assessed and defined in detail, the differences can be appraised, and either chosen between or compromised on depending on savings, redundancy, and resources.
Once a strategy is in place, the overall vision needs to be accurately communicated across all employees, new and old, with specific expectations and short and long term goals in line with the overall companies mission including the expected timeline and required capital and resources.
While there will inevitably be roadblocks and obstacles, proper leadership with the ability to adapt to unforeseen changes and problems can successfully lead a relatively smooth transition. Continuous assessments will be required throughout the process to gauge progress and redefine goals where necessary.