Supply chain executives overlooked in M&A planning

Even though supply chain savings are an important component of most mergers and acquisitions, a recent study shows companies often leave supply chain executives out of the early planning stages.

-- Modern Materials Handling, 2/5/2007

Approximately 30 to 50% of the savings generated in a merger or acquisition can come from supply chain synergies, according to consulting company Accenture. If successfully combining supply chains has so much potential benefit, then supply chain planning is surely among the first tasks undertaken by merging companies, right?  Wrong.

A recent Accenture study shows supply chain executives are involved in early planning in only about half of merger and acquisition deals. By waiting until after a deal closes to identify a strategy for merging supply chain operations, companies are missing an opportunity to jumpstart their savings, says Accenture partner Jay Welsh.

The obvious solution to this problem, he says, is to include supply chain executives in boardroom discussions earlier in the deal cycle. If regulations prevent companies from sharing supply chain data before their merger closes, the companies can hire a third party to begin the planning for them, he says.

Early supply chain planning is particularly important when combining companies from different countries, says Welsh. In these cross-border deals, he says, company executives often underestimate how long it will take to iron out differences in such things as regulations, culture and language.