Procurement Benefits That Come from Acquisitions

March 10th, 2014

If your company is involved with a merger or acquisition how are you leveraging that to your advantage?

Today’s post is by Mark Davis; Sr. Vice President and COO at SafeSourcing

With the recent news of mergers and acquisitions such as Cerberus’ offer of $9B for Safeway, FaceBook’s offer of $19B for WhatsApp, or Comcast’s $45B offer to purchase Time Warner there is no doubt that periods of transition and adjustment are necessary and these times frequently lead to procurement opportunities for the new organization.   In today’s blog we will look at three areas that procurement and supply chain organizations can focus on to get the most out of their efforts

Combined Spend – One of the obvious advantages to having a larger company due a merger or acquisition is the increase in the spend that accompanies it.  This low-hanging fruit allows the company to establish stronger contracts and services due to taking the best features of what each company had before.  Being able to understand the common categories and services will be important to determining which categories get addressed first.  This involves creating a baseline view of each category for both companies that looks at price, volume, contracts and service levels that each company currently has.  An additional outcome of this process will be to streamline the number of different products and vendors the new company works with leaving less to manage by the procurement team.

Efficiencies in Process – Every successful company does some things really well and usually every company being purchased by one of those successful companies presumably does a number of things really well too.  One of the important tasks that gets done during a merger or acquisition is determining quickly what each piece does well and leverage that against the weaker areas of the other.  If one company is strong in logistics but weaker in IT, then those should be areas of synergy early on.  Learning these things and implementing new services and products can mean a very large increase in Request For Proposal and Information projects.  Having a team prepared to execute these or a 3rd party strategic sourcing partner can help make this process go much smoother.

New products & Services – Along with the new products and services that will be required early in the merge process there will usually be many other things that must be quickly sourced as well especially with Marketing and Branding, assuming a new image or company name is a result of the process.  Bags, signage, business cards, websites, and uniforms just begin to scratch the surface of the marketing related items that are frequently needed on the day a merger or acquisition is complete.  There are other projects as it relates to IT infrastructure, temporary labor, warehouse supplies and raw material, however, that are just as important and especially so if keeping a unified standard of product or service is required and more than one standard between both companies exist. 

Companies involved with a merger or acquisition should have teams assigned to determine where the synergies and gaps are between the two companies and prepare plans for how sourcing will move forward starting at day one.  For more information on how SafeSourcing can assist your team with this type of planning or on our “Risk Free” trial program, please contact a SafeSourcing Customer Service Representative.  We have an entire customer services team waiting to assist you today.

We look forward to your comments.

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