How to Ensure Effective Supplier Consolidation Post-M&A

Research from PwC indicates that the majority of organisations view transactions, including M&A, divestments, joint ventures or minority stakes, as the best way to keep up with the changing landscape and secure long-term viability.

However, the transition period after M&A deals are done can be critical in making or breaking its success – particularly when it comes to handling areas as complex as supply chain and logistics operations.

Here, Phil Reuben, Executive Director at the global supply chain and logistics consultancy SCALA, offers practical tips for leaders on how to smoothly manage post-M&A transition across procurement, supply chain and logistics operations.

What steps can be taken to ensure a smooth supply chain transition post-M&A?

The key is to combine robust pre-M&A planning with vigilant monitoring once the deal is complete. Even with thorough due diligence, unforeseen challenges can arise, so it’s essential to allocate resources to oversee the early transition and swiftly address any operational issues.

The real focus should be on identifying gaps in capacity (or duplication), operational flow or team skillsets before they disrupt the new entity’s performance. Seeking a third-party, objective view to help oversee the process can help to mitigate risks and promote success.

How can businesses consolidate suppliers without disruptions?

Supplier consolidation requires mapping out all existing contracts and engaging with stakeholders early on.

If you’re planning to move away from certain suppliers, transparent communication and a carefully managed exit strategy can help minimise risks like stock shortages and unexpected costs.

This approach ensures continuity of service while you gradually align suppliers with the broader goals of your newly merged organisation.

What’s the best approach to integrating new IT systems?

Many of the smoothest integrations happen when businesses consider operating dual workstreams temporarily – maintaining existing systems while testing new ones in parallel. 

This minimises downtime and enables teams to adapt gradually, rather than facing an abrupt switch.

Training and user adoption are just as critical as the technical set-up, so it’s worth investing time in getting people comfortable with new platforms so they can reap the benefits.

How should companies handle contract exits and renegotiations?

Thorough contract reviews are a must – particularly as some agreements may include penalties for early termination or windows for advantageous renegotiation.

By coordinating exits and renegotiations with your operational timelines, you can avoid service interruptions and prioritise the contracts that offer the most strategic value to your merged enterprise.

It’s also worth reaching out to suppliers early to maintain good relationships and prevent disruption.

What key insights does SCALA’s M&A good practice guide offer?

Our guide underscores the importance of strategic planning and modelling potential “what if” scenarios for logistics, warehousing and supplier networks before finalising a deal.

That being said, it also acknowledges that there can be limited time before a deal takes place and that even the best-laid plans can require ongoing refinement once operations merge, so it explores the need for effective monitoring post-deal.

One key factor it highlights is the impact on human resources and supporting people through change, which is as important as any technical or process-driven intervention.

Explore the latest edition of Procurement Magazine and be part of the conversation at our global conference series, Procurement & Supply Chain LIVE.

Discover all our upcoming events and secure your tickets today.

Procurement Magazine is a BizClik brand.