Q

Develop supply chain integration through mergers and acquisitions

In this expert answer, learn how to achieve successful supply chain integration.

My business recently went through an acquisition. What steps need to be taken for supply chain integration? Specifically, how can software help with this process?

During a merger, many companies consolidate the back room type processes and often leave the brand and products intact. The supply chains may maintain distinct raw material suppliers if the company's product lines are diverse.

For example, Estee Lauder Inc. owns many cosmetic brands, and the company uses very distinct packaging designs. It consolidated many of the bottle and container purchases, although some unique raw materials still come from specialty sources.

The goals of a merger may be to recover investment capital as well as build a foundation for future streamlined operations. Companies expect to save working capital, so of course this means streamlining IT and administration. With the supply chain, that means reducing suppliers, facilities, systems and consolidating data.

The first step is to map the processes and create a systems portfolio. A neutral facilitator is important since, ultimately, a particular practice or system will be selected as the superior practice to adopt across the business, and a professional facilitator can help maintain constructive dialogue.

Software helps in the following ways:

Supplier sourcing and spend management

A view of the total spend by various cuts can really highlight how and illuminate where dollars are spent. Supplier risk management should also be considered.

Supply chain network design and optimization

Create a total review of the network -- plant and warehouse. Look at how much capacity you need and examine the best locations to produce, hold inventory and distribute. Existing approaches may not work, and this would be the time to evaluate whether the new network will support your business goals.

Transportation spend

Once you know who your suppliers are and where your facilities are, consider the transportation spend. Most companies, even without the catalyst of an acquisition, are hard pressed to know their spend. Consider subscribing to a transportation management system (TMS) that can help with spend analytics and optimize logistics operations.

Integration

Integration service providers can create a neutral platform to pull data together from other applications and source any new or legacy applications that might be selected to support the business. Rather than purchasing an expensive integration suite from a larger integration company, you might look at the leading managed file transfer (MFT) companies that support both application-to-application and enterprise integration.

Cloud computing

I advise multisite capability, not just hosting multiple versions. Cloud computing can provide a company-wide view of the supply chain operations, which helps reduce IT operational costs in the short run and provides greater control over the long run. There are many cloud-based supply chain systems that allow users to plug in their disparate systems and let each operation maintain their legacies.

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This was first published in June 2014

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