cscmp 2014: planning through mergers & acquisitions

Download CSCMP 2014: Planning Through Mergers & Acquisitions

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Inking the deal is just the first step. Mergers and acquisitions require a melding of cultures between two organizations to rationalize physical manufacturing and distribution networks, integrate systems and reconcile differences in processes and metrics. Hear from executives at companies undertaking major mergers, acquisition and divestitures on how to make supply chain integration a success.

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  • 1. Planning ThroughMergers & Acquisitions

2. Its a MAD WorldMAD Mergers, Acquisitions, DivestituresThroughJune 16,2014 3. Its a MAD WorldLinearProjectionat CurrentRate 4. Managing Demand and SupplyDuring and After a MAD Event How to plan through the turbulence? Increased complexity Network and supplier rationalization System and process integration Human and cultural aspects Challenges, approaches and lessons learned Walk away with appreciation of the supply chaincomplexities related to MAD activities Successful strategies and best practices 5. Great PanelistsCraig McLaughlinGlobal DirectorIntegrated Business PlanningLarry HartleySVP Supply ChainRon HordVP Supply Chain Planning& Contract Manufacturing 6. Case Study in DivestitureCraig McLaughlinGlobal DirectorIntegrated Business PlanningLarry HartleySVP Supply ChainRon HordVP Supply Chain Planning& Contract Manufacturing 7. Approx $52 billionGlobal portfolioApprox $35 billionGlobal portfolioDivesture - ScopeApprox $17 billionNorth America portfolio 8. We offer many of the worlds favoritebrands 9. Fast factsnet revenues of $35 billion in 2013global snacks powerhouseproducts marketed in 165 countries#1 in biscuits, chocolate, candy & powderedbeverages#2 in gum & coffeeover 100,000 employeesdonated more than one billion servings of foodsince 1997 10. Divesture Planning ChallengesPeople Assign the most qualified operations resources onProcesses & Systems Test, test, test the systems. Manufacturing and warehouse de-coupling. Transportation dis-synergies. Customer order complexity. Procurement scale impacts. Transition Services.the project. Consider both capability and maximized talentretention in building new teams. Ensure people training is focused on for Day 1capability needs. 11. Divesture ApproachEstablish a formal dedicated team for eachfunctionFunctional Steering TeamFunctional Project LeadHumanResourcesFocus AreasCommunicationOrg Design &StructureRetentionMotivationRewardFacilitiesChange MgmtCustomerServiceFocus AreasPolicies/WorkProcessesSystem splitCross-countryAlignmentSales AlignmentCustomercommunication /new vendor set-upCustomerFinanceFocus AreasSystemsWork ProcessesAP/AR by sectorPost auditCross-countryalignmentTSAProductSupplyFocus AreasSystem /Data SplitSAPDemand/SupplyNetworkReplenishmentMaterials MgmtBU AlignmentSME needsTSALogistics OpsWarehousingWendyFocus AreasStrategySystemsCapital/AssetLeases3PL vs ownedCross-countryalignmentTSATransportationWendyFocus AreasTrans PlanningimpactsSystemsWork ProcessesProcurementVendor MgmtRoute to MarketTSAGlobal SteeringTeam 12. Divesture ApproachMeasure progress weeklyKey Accomplishments this Week Key Upcoming Activities & DecisionsKey Issues/Concerns/Risks Key Milestone Status UpdateMajor Milestone (top ~5-10)TargetCompete Status4 Box Update 13. Divesture ApproachCheck dependencies oftenPlanningFinanceManufacturing& LogisticsSalesLegal 14. Divesture Lessons learned Keep optional change to a minimum anddeploy change management early. Assign a full time project team with astrong leader. Create a clearly defined governancestructure and report out approach. Review progress on a weekly basis. Communicate weekly, in order to minimizerumors. Ensure transparency with other dependentstakeholders. Be crystal clear on priorities and get seniorapproval. 15. Merger Case StudyCraig McLaughlinGlobal DirectorIntegrated Business PlanningLarry HartleySVP Supply ChainRon HordVP Supply Chain Planning& Contract Manufacturing 16. Setting the Stage 17. Coming Together 18. Two of Everything! 19. Freshman Year 20. The Challenge Integrate two distinctorganizations with similarproducts, service promises andcustomer profiles, but differentapproaches Complete while dealing withopen headcount, dual leadersacross the org, assortmentchanges and customerconversions Deliver promised synergies Planning could only go so far 21. Scope and Timing Deliver $70-100M in run ratesynergies by end of 2016 Support customerconversions to legacy OfficeDepot systems Support move to commonSKU base in three channels Design a flexible DC networkthat supports customers andlowers cost 22. Approach Use outside consultant Ensure dedicatedconsolidation planningresources Use data to inform decisions Avoid getting bogged down indecisions that cant be madeyet Key assumptions: Mustcapture synergies, timeline,service maintained 23. Lessons Get the org structure rightfirst Commit to communicate Expect and explainchange Make decisions withsense of urgency Seek feedback frommultiple levels, field andHQ 24. People Create mix of people fromboth legacy organizations Reward top performerswho lead with core values Communicate, even if youdont have all the answers Get rid of us versusthem Build a brand new culture 25. We are Office Depot, Inc. 26. Connecting the Lessons People take different paths to reachthe same destination. Throughout life, you will meet newpeople and say goodbye to others. Embrace and adapt to the newpeople and experiences. Learn from those around you. Choose who you surround yourselfwith carefully. The person/student/leader you werebefore must change if you want tocontinue to succeed. 27. Acquisition Case StudyCraig McLaughlinGlobal DirectorIntegrated Business PlanningLarry HartleySVP Supply ChainRon HordVP Supply Chain Planning& Contract Manufacturing 28. Our CompanyA Review of our Heritage, Values, Principles, and Growth 29. Company Heritage Founded in 1897 byJerome M. Smucker Headquartered in Orrville,Ohio Leading NorthAmerican brands Five generations of familymanagement Commitment to quality andconsumer trust 30. Our PurposeHelping tobring familiestogether tosharememorablemeals andmoments 31. Basic BeliefsThe Companys values and principles that guideboth strategic decisions and our daily behavior Quality People Ethics Growth Independence 32. The mutual respect for ourfellow employees andan atmosphere that makespeople proud to work here. 33. Thank you for a job well done Listening with full attention Looking for the good in others Having a sense of humor 34. Core CompetenciesAbility toImplementDeveloping StrongRelationshipsBuilding EmotionalBonds 35. Our VisionWe will own and market food brands that hold the#1 market position in their respective category 36. Transformation ThroughAcquisitions2007Calendar Years200220042006200820112012 2013 37. Transformational GrowthNet Sales in Billions 38. A Leading U.S. Shelf-StableFood ManufacturerCoffee, peanut butterand fruit spreadscontributed 2/3 of the$5.9 billionin FY13 net salesCoffee48%OtherFlour & BakingIngredients 4%6%Baking Mixes& Frostings 6%13% FruitSpreadsPeanut ButterShortening& Oils6%Canned Milk4%13%Smucker FY13 Sales by Category 39. Strength of Smucker Culture and continuity ofmanagement Clearly defined strategy Portfolio of leading brands Proven ability to execute History of long-term growth Strong cash generation andresponsible deployment 40. Acquisition Types Larger in size Game changing New markets and new categories Increase category presence Leverage existing infrastructure Strengthens core competencies Smaller in size New capabilities Capitalize on Smucker resourcesTransformationalBolt OnEnabling39 41. The Integration Process Vocabulary & Acronyms Synergies versus run model improvements Dual systems Supply Chain Planning Face to face communicationa lot of it! Effective first, efficient second Get the functional experts involved early On site JMS presence Cultural Representative Integration Team structure & Continuity Even small integrations require full integrationChallengesOvercoming thechallengesLessonsLearned40 42. The People Side of AcquisitionsDeveloping Strong Relationships is a Core Competency Face to face communication is primary method ofcommunication. Transparency with Communications is critical - Tellpeople what is happening when you know it. Key On boarding activities for all employees: Learning from Each Other Why we are who we are sessions Leadership development Resonant Leaders Integration cadence is tried and true. 43. Human Side of ChangeCraig McLaughlinGlobal DirectorIntegrated Business PlanningLarry HartleySVP Supply ChainRon HordVP Supply Chain Planning& Contract Manufacturing 44. Human Side of ChangeCraig McLaughlinGlobal DirectorIntegrated Business PlanningLarry HartleySVP Supply ChainRon HordVP Supply Chain Planning& Contract ManufacturingHow do you engage, inspire and motivate peopleduring mergers, acquisitions and divestitures? Q: 45. Human Side of ChangeCraig McLaughlinGlobal DirectorIntegrated Business PlanningLarry HartleySVP Supply ChainRon HordVP Supply Chain Planning& Contract ManufacturingHow do you meld/create new cultures or dealwith situations like co-CEO? Q: 46. Thank You!Question/Answer? 47. Dont Forget to Complete theEvaluation!Download the conference app and rate this session.Start by choosing: Cornerstones and Tracks on the mainmenu and follow the prompts to this sessions landing page.

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