A collaborative, cross-functional approach is the key to driving improvements across multiple acquisitions
Aggressive growth based on multiple acquisitions has become a relatively common strategy for companies looking to break into new markets, gain competitive edge or acquire new products and technologies. However, successfully merging multiple companies, processes and business cultures is not without its challenges.
Combining multiple businesses results in many issues that did not exist before. These new challenges include: operating a company with a presence in multiple markets, serving a larger and more diverse customer base, managing a more complex product and services portfolio and a high level of people and operational complexity. Another issue is that cost reduction goals can sometimes come into conflict with revenue growth opportunities. Compound this with acquisitions in different countries where language and cultural barriers play a part and even the most solid growth strategy can easily be derailed.
What goes wrong and why?
There are a number of factors that can throw a great strategy off course. Some things, like an unexpected downturn in the market, are beyond your control. However, others such as creating a homogenous culture, implementing a clear set of operating procedures across your organization and making sure you’ve got the right people in the right place with the right training, are very much within leadership’s grasp.
Maine Pointe’s client, a leading global agricultural distribution company formed by multiple acquisitions, perfectly illustrates some of the potential pitfalls of growth through acquisition. Having bought more than 40 companies when the market was at its peak, the organization was ill-prepared for a subsequent prolonged downturn in the market. Leadership recognized they needed to take swift action to fix the business, but were uncertain about how to begin. They invited Maine Pointe to help release cash, drive out cost and create a platform for sustainable growth.Breaking down siloes
With such a high number of acquisitions and a lack of enterprise-wide synergies, a siloed, function-by-function strategy was unlikely to yield the rapid results the company needed.
If your procurement, operations, and logistics functions aren’t world class or aren’t aligned to work together seamlessly to delight your customers while minimizing excess cost and working capital, you may be leaving money on the table. Even worse, your company may be at risk.” *
Instead, they took a, highly collaborative, cross-functional methodology across procurement, logistics, operations, data analytics and sales & operations planning. This released $18M in cash within eight weeks, providing the company with the self-funding operational momentum to invest in redesigning the service and operating model to support growth and ultimately resulting in a 50% EBITDA improvement.
- Drove alignment across 40 acquired businesses to create a new ‘client way’ operating model
- Consolidated 77 different job titles to just four, providing the basis to build a leadership structure with clear P&L responsibility at district level
- Improved productivity and increased capacity
- Implemented a Management Operating System (MOS), establishing clear metrics to ensure accountability for results
- Implemented a strategic approach to procurement driving ‘quick wins’, enhanced strategic suppliers and developed a new scorecard to track and sustain improvements over time
- Provided a 3PL solution which improved visibility of shipping cost and on-time delivery performance
- Harnessed the client’s data warehouse to develop customized, real-time and highly visual dashboard
- Provided actionable insights into areas such as spend data, supplier performance and inventory reporting inform strategic and tactical decision making
*End-to-End Supply Chain Best Practices, Global Supply Chain Institute University of Tennessee, October, 2017
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Maine Pointe is a global supply chain and operations consulting firm trusted by many chief executives and private equity firms to drive compelling economic returns for their companies. We achieve this by delivering accelerated, sustainable improvements in EBITDA, cash and growth across their procurement, logistics and operations. Our hands-on implementation experts work with executives and their teams to rapidly break through functional silos and transform the buy-make-move-fulfill supply chain to deliver the greatest value to customers and investors at the lowest cost to business. We call this Total Value Optimization (TVO)™.
Maine Pointe’s engagements are results-driven and deliver between 4:1-8:1 ROI. We are so confident in our work and our processes that we provide a unique 100% guarantee of engagement fees based on annualized savings. www.mainepointe.com