Breaking the Supply Chain Mergers & Acquisitions
The Ailing Economy 61% of M & A fail to achieve expectations
Why are M & A’s Disappointing Share Holders? n Adverse economic times n Extremely complex n Synergy plan lacking
Supply Chain Contribution
Synergy Focus 4. SG&A Products Market Penetration Plants and Resources 5. Supply Chain – Why? 1. 2. 3.
Five Reasons Supply Chain is Last Considered To Be Administrative Complex Silos SC Synergies Don’t Understand Opportunities PBD
Six Critical Success Factors Management Support Strategy Development Accountability Metrics Process Organization Structure
Management Support Creating lasting synergies
Keys to Management Support n n n Confront cultural boundaries. Commit the needed resources. Support decisions for the better of the whole. Develop company-wide adrenalin. Provide tools needed.
Strategy Outside In Look
Strategy Development Supply Chain Customer Marketing Engineering n M gt . ng an ni Pl ra tio Source Approval Quality Customer ac k ed b y Fe EA M W t Manufacturing Marketing ra nt s en an Pl Make Buy ar n tio uc m sh i en pl Re od Pr Purchasing PF d ig u y nf lit bi m an lia ss Suppliers Inventory Agility Re ce o Pr Co & D De EA FM NP MPS VA/VE Target Costs
Strategy n External Looks • Where is the market • Where are my plants • Foreign and Domestic customs • Landscape changes in products • Who are our customers • What are the customer expectations • Existing Supply Chain • Must be CUSTOMER FOCUSED n Supply Chain • Cost of distribution • Logistics/Availability • Trade barriers/customs • Design integration RPD • Value add contribution • Built in costs • 3 -D Rationalization
Strategy n Internal Looks • • • n Cultures Processes Skills Interfaces Resource Allocation Information Systems Supply Chain • • • Compartmental vs. Team Advanced or developmental Overall knowledge • Divergent/Convergent • Stress factor • Agility
Quality 3 -D Rationalization al ob ce Gl vi r Se Competitive
Organization De-construction & Supply Chain Abyss
Supply Chain Abyss Centripetal Structure Division 4 Division 1 Centralized Supply Chain Division 3 Division 2 • Resistance • Lack of empowerment • Decisions are slowed • Supply chains are broken
De-construction Centrifugal Structure Source Selection • Better performance • Still resistance • Slightly better execution • Often lacks leadership Centralized Strategy Continuous Improvement Material Acquisition
Synergy Approach Division 1 Centralized Strategy & Leadership Division 4 Division 2 • Multi-function selection Decentralized teams Execution • Participation through representation. Division 3 • Rapid decision deployment.
Commodity Team Representation Engineering Sourcing Supplier QA Logistics
Organization Variation
Key to Organization Success Tell me and I will forget, show me and I may remember, involve me and I will care.
Accountability
Accountability Vs. Responsibility • The team must be accountable for the same things. • Team must be part of the decision process. • Performance must be measurable. • All parties must be resigned to the target. • There must be a plan to support the what. • Communication of expectations. Who What When How
Summing Up Concise Communication Clear Strategic Direction Four Keys to High Performance Teams Empowerment Clear Ownership
Supply Chain Metrics
What happened to measure it – and it will get better? n n n <60% measure supply base. <50% of that measure more than price. <50% of that measure more than delivery and price.
Typical Corporate Metrics Issues n n n Not all divisions measure performance. Not all divisions measure equally. Lacks wealth equilibrium. Division IT systems lack flexibility. No time to measure. Conversion costs.
Supply Chain Processes
4 -Key Processes Make or Break Synergies Source Selection Source Qualification Source Identification Negotiation
Objective Selection System
Six Key System Components n n n Objective criteria Quantifiable Unbiased appraisal Cross-division participation Cross-functional participation Clear and concise feedback
Negotiation Cost Opportunity Model % Opportunity vs. Cost Contribution % Savings Opportunity Savings Timing Margin Logistics Immediate Mfg. Cost Short Term Material Cost Designed In Cost Mid Term Conversion Costs Subtract
Summing it Up 25 Companies 4 Industries 4 Experiences Management Support Strategy Development Accountability Metrics Process Organization Structure
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