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Supply Chain Expertise Essential in Manufacturing M&A

Posted By Paul Tate, November 22, 2012 at 8:33 AM, in Category: Global Value Networks

As cash-ready manufacturers seek to generate global growth through carefully selected mergers and acquisitions around the world, the role of supply chain expertise in assessing the challenges and deciding the best fit is becoming increasingly important.

That was one of the key conclusions to emerge from the latest Decision Compass Supply Networks Group meeting of Manufacturing Leadership Council.

(Global manufacturing M&A activity - Signs of Growth? Global Manufacturing M&A Activity Rebounds) is on a steeply upward trajectory right now – rising by150% to £25 billion last quarter compared to the same period last year.

Against this background, one Council member noted that as companies go global through M&A strategies, they must be able to decide swiftly where the newly enlarged company can best make its expanded range of products and customize them most cost-effectively to serve both developed and emerging markets. Supply chain synergies, complementary processes, non-conflicting partnerships and geographic spread are critical factors in this overall decision.

A senior supply chain executive at one large CPG company, which has recently completed its latest acquisition, explained that in his organization supply chain executives were directly involved on the decision-making business team from the very beginning, helping to assess the suitability of the potential target before the deal was done.

"That is the way to do it," responded a leading academic Council member and long-time supply chain expert, adding that the supply chain should not be told at the last minute that the company has bought something. This still happens far too often, he observed. Supply chain should be right there in the early stages of the acquisition process making sure the enterprise can harmonize supply chain operations profitably."

Are supply chain executives involved from the early stages in your M&A initiatives? What are the most important synergies they should be looking for to ensure a smooth transition when buying a new company? What are the dangers of leaving supply chain experts out of the acquisition process until the deal is almost done?

Written by Paul Tate

Paul Tate is Research Director and Executive Editor with Frost & Sullivan's Manufacturing Leadership Council. He also directs the Manufacturing Leadership Council's Board of Governors, the Council's annual Critical Issues Agenda, and the Manufacturing Leadership Research Panel. Follow us on Twitter: @MfgExecutive


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