Preparing Your Manufacturing
Supply Chain for M&A

Preparing your supply chain for merger-related activity can support the new company that forms. This is because the supply chain has one of the most important effects on M&A. You must be well-prepared for mergers and acquisitions to ensure companies achieve their goals. Ensuring a well-functioning supply chain is key to realizing those goals. 

What exactly is the supply chain? 

A supply chain is the network a company uses with its suppliers to enable its goods to reach the consumer. Supply chains involve a wide range of people, resources, activities, and information, each of which facilitates distribution and production. A well-designed supply chain can slash expenses. 

Why prepare for M&A?

A well-prepared supply chain team can boost earnings at a time when the new entity most needs this boost. This bolsters profitability, and can play a key role in success. You may even avoid layoffs and pay cuts. 

The goal of any M&A is to make more profit from the new entity, either by cutting expenses or generating new revenue streams. More revenue generation, however, it is generally not feasible over the short term. The near-term revenue therefore depends on cutting expenses. 

M&A failure rates are very high, partially because of the early expenses these ventures generate. Getting your supply chain ready for M&A can reduce the risk of failure, helping you save money until you begin generating more revenue. 

Strategies for M&A Preparation

As you move into M&A and begin to prepare, these tactics can help you get ready: 

  • Build a triage team that includes stakeholders from various sections. They should be prepared to quickly respond to unexpected events. 
  • Determine the size and scope of M&A, as well as how it will likely impact your company. 
  • Identify members of the larger team that will coordinate with the triage team. 
  • Maintain customer satisfaction via on-time delivery and exceptional service. You must ensure your company retains value. 
  • Build an M&A supplier database for use after the merger. It should contain key supplier data such as annual spend, location, contacts, supply agreements, and agreement termination date. 
  • Rank the suppliers so you know which is most important and which contributes the most value. 
  • Build a base of suppliers for the new entity drawing upon this list.