Supply chain mergers and acquisitions


Supply chain mergers and acquisitions

Opportunities and challenges

Mergers and acquisitions (M&As) offer companies the opportunity to explore new horizons, be it through access to new markets, technologies or sales increases. But M&As are not always crowned with success: 70 to 90% fail. The main causes can lie with the people involved, but other factors such as inflated purchase prices, unrealistic expectations and inadequate supply chain integration often play a role.

Supply chain integration in M&As is a complex process that requires thorough planning. Supply chain managers play a crucial role in this process. They work to combine the best aspects of both companies’ supply chains while ensuring smooth business operations. This includes introducing new organisational models, leveraging expertise and best practices, standardising procedures and investing in the supply chain. They provide the insights to minimise risks and add value, integrating both companies’ supply chains with minimal disruption and operational risk

Supply chain synergies need to be considered in mergers and acquisitions. Companies should carefully analyse their supply chains as they affect business performance in every way. Making the best use of the supplier network and production base requires a comprehensive redesign and optimisation of the supply chain.

In order to be successful, companies need to consider supply chain mergers as early as the planning phase, as a post-merger supply chain can deliver significant cost savings. The first step should be a comprehensive assessment, followed by optimisation of the supply chain network using digital modelling tools.

The following mistakes should be avoided:

  • Use of wrong metrics and key figures,
  • Inadequate planning,
  • Defining the goal but not the approach to achieve it,
  • Avoiding supply chain disruptions,
  • Trying to consolidate IT systems too early.

Creating models to optimise and simulate supply chains with appropriate software tools help to avoid the aforementioned mistakes.

Supply chain mergers and acquisitions are on the rise as they can create more secure and resilient supply chains. This is particularly relevant in times of global instability. Companies today need to design more flexible supply chains to remain competitive.

Source: The AnyLogic Company

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