Daily Archives: July 11, 2007

Supply Chain Merger and Acquisition

In AMR’s M&A: Designing the Supply Chain Response, AMR presented a checklist on where to get started as an M&A approaches, with questions to jump start the process. The checklist can be summarized as follows:

  1. Before it happens, identify synergies.
  2. Carefully analyze opportunity against risk.
  3. Build capabilities.
  4. Design the supply response.

While a good article, and a great checklist, it seems to imply that the role of supply chain comes after a merger or acquisition has been defined, not before. For any M&A activity to be successful, there needs to be alignment between both the business goals and the business operations of the companies considering the M&A activity.

With regards to business operations, there needs to be alignment in sourcing activity, production activity, distribution activity, marketing activity, and day to day operations. With respect to day-to-day operations, there needs to be alignment between organizational culture. After all, the two companies are going to have to work as one.

With respect to sourcing, distribution, and cultural alignment, which department is better to judge alignment than supply chain management? Smooth operations are all about flow, inflow, people-driven process flow, and outflow – and flow is the domain of supply chain. Thus, supply chain should be involved in the process before a merger or acquisition is decided upon and the synergy identification and opportunity analysis should take place well before the decision is made.