If Your Company's Acquired, Here's the Third Thing You Should Do

Supply chain contributes about half of integration savings

Supply Chain Merge
Supply Chain Merge. Getty Images

There's a really good chance that the company you work for will be a acquired, or will acquire another company - or acquire a division of another company.  100% of the company's I've worked for since I left the U.S. Army's Quartermaster Corps have been involved in one sort of integration or another.

And whether you're the acquirer or the target, your work life will change.  As companies work their way through any integration - through due diligence, pre-integration, the deal closing and then post-integration activities - they'll be juggling many, many balls.

  What will the new organization look like?  How do we ensure that the new organization functions properly?  How do we achieve the savings necessary to meet our savings goal?

We'll get to that last question is a moment.  In the meantime, there's an unspoken priority on everyone's mind.  That priority is called "will I keep my job"?  That's the question everyone's walking around asking themselves - but the question very few will ask out loud.  They'll wonder what the newly merged company's organization chart will look like.  They'll wonder if there's someone at the new company who does the job they currently do.  They'll wonder if who is better at that job.  And they'll wonder who's better connected within the new company.  All of those questions will be floating through everyone's minds. 

And while that's what is going through everyone's minds - here's what you can do to help cut through all that and help ensure you've got a role in the newly formed company.

  The thing to do relates directly back to that question we asked earlier and said we'd get back to:

"How do we achieve the savings necessary to meet our savings goal?"

And that brings us to the third thing you need to do if you're company's acquired.  I've addressed the first thing you need to do and the second thing you need to do.

  I've also pointed out how supply chain impacts an M&A environment.  And how the Heinz Kraft merger will succeed by optimizing supply chain

So that third thing - identify the savings goal, create a savings plan and execute that plan.  Okay, that might be the third, fourth and fifth things.  But they are all related to achieving the savings that the powers that be imagined when they dreamed up this particular acquisition.  How do you know what your savings target is?

Here's the secret to figuring out what your savings target is: By integrating and optimizing the supply chains of the newly formed companies, the newly formed company expects that supply chain will achieve about 30%-50% of the planned savings.  For instance, when Company A acquires Company B, there's usually an announcement related to savings.  In that announcement, there will be a number - $300 million or $25 million or $100,000.  Whatever it is, you know that you can expect that optimized supply chain is expected to achieve half those savings. 

(Human capital consolidation will account for most of the rest of those savings.  Those would be the layoffs that typically accompany most of these integration activities. Ergo, the reason everyone's wondering that question that no one will say out loud.)

Once you figure out what's expected of you and your supply chain, you can go about getting it done.  Remember, optimizing your supply chain in the new post-integration environment means that you achieve those savings while making sure your customers get what they want, when they want it

Understand your savings goal early and then negotiate with your suppliers, consolidate them and launch sourcing projects that will drive those savings.