In the current business climate, organisations are navigating many issues. These include the rise of Artificial Intelligence (AI) and various ongoing geopolitical disruptions. To foster growth, businesses must consistently adjust and adapt to keep up with these shifting conditions.
Mergers and Acquisitions (M&As) are one popular route by which businesses can do this. Morgan Stanley predicts that M&As will double in volume this year compared with 2023. However, often short pre-M&A timelines leave little time to conduct exhaustive due diligence, putting higher pressure on post-M&A procedures. M&As, therefore, must have well-thought-out end-to-end strategic planning. This is particularly the case when it comes to integrating supply chain and logistics processes. This is because these operations are often the most complex part of a business.
For a merger or acquisition to be successful, the transition cannot compromise business resilience. Organisations must have resilient supply chains that can adapt to the ever-changing demands of the business world. Not only that, but they must also be able to help optimise business performance.
The importance of monitoring integration
Organisations can’t afford to ignore the importance of monitoring supply chain and logistics operations post-deal. Effective supply chain and logistics management is critical for achieving operational excellence, driving customer satisfaction, and maintaining a competitive edge in the marketplace. Keeping a close eye on suppliers and on-the-ground teams early on keeps small issues from escalating into larger problems.
It’s not uncommon for a new business entity to face teething issues in the post-M&A period. However, having a responsive supply chain (and an effective team to manage it) can make all the difference. They should be able to adjust to disruptions – whether due to supplier issues, logistical challenges, or market shifts. By maintaining a proactive approach to supply chain monitoring, businesses can ensure a seamless transition that minimises disruption, fosters resilience and seizes opportunities for optimisation.
Tackling teething issues
The pre-M&A period is often conducted under considerable time pressure. Therefore, pre-acquisition due diligence sometimes begins and ends with the finance and legal side of business. This doesn’t necessarily account for all the operational detail which is central to a business continuing to run effectively. Plus, there is always potential for market shifts or complications to disrupt operations, adding unforeseen risks and costs.
When it comes to integration, in practice, challenges can arise from various sources. These can include operational and cultural clashes between merging organisations, glitches in new technology systems, and knowledge gaps between teams.
One of the most significant hurdles post-M&A can be the human element. Teams coming together might result in the need to restructure. Workplaces may need to be relocated, and job roles may need to transition to account for changing supply chain responsibilities. Companies can manage this by implementing dual systems initially before operations are streamlined.
Conducting a comprehensive post-M&A supply chain and logistics review is a critical stage that can be overlooked in the initial period following the merger or acquisition. If a full review was not completed pre-M&A, then the new entity should identify opportunities to streamline operations and pinpoint inefficiencies that may have been overlooked. This review process is not just about fixing immediate issues; it is an opportunity to integrate best practice from both organisations, fostering a collaborative environment that encourages continuous improvement.
As we discussed in our good practice guide, engaging with experienced supply chain experts during this phase can provide valuable insights and facilitate smoother transitions, ultimately supporting greater success in the marketplace. By prioritising these aspects, businesses can mitigate the impact of teething issues, ensuring a more seamless integration that lays a strong foundation for future growth.
Navigating evolving markets post-M&A
As market conditions continue to evolve with high interest rates, political uncertainty, and the disruptive potential of AI, navigating business conditions post-M&A has never been more challenging. KPMG predict that this year, 50% of supply chain organisations will invest in AI, stating that the supply chain landscape is undergoing a profound transformation. As such, it is more prevalent than ever for organisations to review and optimise their supply chain procedures.
On top of AI, recent geopolitical disruptions have impacted global supply chains massively. Ongoing conflicts, trade tensions, and regional instabilities have resulted in transportation disruptions. For example, the Red Sea crisis has severely disrupted shipping routes through critical waterways, drastically affecting delivery times and costs. Companies are being forced to re-evaluate supply chain strategies and prioritise agility above all, focusing on resilience and diversification to mitigate risks.
M&As present a unique opportunity for organisations to reinvent themselves or pursue growth during these times of uncertainty. It is therefore paramount that supply chain leaders prioritise strategic planning and post-M&A supply chain review in their initiatives to fully leverage the benefits that M&As have to offer.
Ultimately, the journey through a merger and acquisition presents challenges and opportunities amid an unpredictable and evolving market. Strategic end-to-end planning is essential, and it is vital that post-M&A operations are not overlooked. By adopting a proactive approach to monitoring supply chains and operations post-M&A, businesses can overcome teething issues and achieve a smoother integration; they can also position themselves for long-term success and growth in an ever-changing business landscape.
- Collaboration & Optimization