Download - CSCMP 2014: Planning Through Mergers & Acquisitions

Planning Through Mergers & Acquisitions

It’s a MAD World

MAD – Mergers, Acquisitions, Divestitures

ThroughJune 16,2014

It’s a MAD World

LinearProjectionat CurrentRate

$1,700

Managing Demand and Supply During 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 chain

complexities related to MAD activities• Successful strategies and best practices

Great Panelists

Craig McLaughlinGlobal Director Integrated Business Planning

Larry HartleySVP Supply Chain

Ron HordVP Supply Chain Planning& Contract Manufacturing

Case Study in Divestiture




Approx $52 billionGlobal portfolio

Approx $35 billionGlobal portfolio

Approx $17 billionNorth America portfolio

Divesture - Scope

We offer many of the world’s favorite brands

Fast facts

net revenues of $35 billion in 2013

global snacks powerhouse

products marketed in 165 countries

#1 in biscuits, chocolate, candy & powdered beverages

#2 in gum & coffee

over 100,000 employees

donated more than one billion servings of food since 1997

Divesture – Planning Challenges

Processes & Systems• Test, test, test the systems.• Manufacturing and warehouse de-coupling. • Transportation dis-synergies.• Customer order complexity.• Procurement scale impacts.• Transition Services.

People• Assign the most qualified operations resources on the

project.• Consider both capability and maximized talent

retention in building new teams.• Ensure people training is focused on for Day 1

capability needs.

Divesture – ApproachEstablish a formal dedicated team for each function

Functional Steering Team

Human Resources

Focus Areas

CommunicationOrg Design & Structure

RetentionMotivationRewardFacilities

Change Mgmt

Customer Service

Focus Areas

Policies/Work Processes

System splitCross-country

AlignmentSales Alignment

Customer communication / new

vendor set-up

Customer Finance

Focus Areas

SystemsWork ProcessesAP/AR by sector

Post auditCross-country

alignmentTSA

Product Supply

Focus Areas

System /Data SplitSAP

Demand/SupplyNetwork

ReplenishmentMaterials MgmtBU AlignmentSME needs

TSA

Logistics OpsWarehou

sing Wendy

Focus Areas

StrategySystemsCapital/Asset

Leases3PL vs ownedCross-country

alignmentTSA

Transportation Wendy

Focus Areas

Trans Planning impactsSystems

Work Processe

sProcurem

entVendor Mgmt

Route to MarketTSA

Global Steering Team

Divesture – ApproachMeasure progress weekly

Key Accomplishments this Week Key Upcoming Activities & Decisions

Key Issues/Concerns/Risks Key Milestone Status Update

Major Milestone (top ~5-10)Target

Compete Status

“4 Box Update”

Divesture – ApproachCheck dependencies often

Planning

Finance

Manufacturing & Logistics

Legal

Sales

Divesture – Lessons learned

• Keep optional change to a minimum and deploy change management early.

• Assign a full time project team with a strong leader.

• Create a clearly defined governance structure and report out approach.

• Review progress on a weekly basis.• Communicate weekly, in order to minimize

rumors.• Ensure transparency with other dependent

stakeholders.• Be crystal clear on priorities and get senior

approval.

Merger Case Study




Setting the Stage

Coming Together

Two of Everything!

Freshman Year

The Challenge

• Integrate two distinct organizations with similar products, service promises and customer profiles, but different approaches

• Complete while dealing with open headcount, dual leaders across the org, assortment changes and customer conversions

• Deliver promised synergies• Planning could only go so far

Scope and Timing

• Deliver $70-100M in run rate synergies by end of 2016

• Support customer conversions to legacy Office Depot systems

• Support move to common SKU base in three channels

• Design a flexible DC network that supports customers and lowers cost

Approach

• Use outside consultant• Ensure dedicated

consolidation planning resources

• Use data to inform decisions• Avoid getting bogged down in

decisions that can’t be made yet

• Key assumptions: Must capture synergies, timeline, service maintained

Lessons

• Get the org structure right first

• Commit to communicate• Expect and explain

change• Make decisions with

sense of urgency• Seek feedback from

multiple levels, field and HQ

People

• Create mix of people from both legacy organizations

• Reward top performers who lead with core values

• Communicate, even if you don’t have all the answers

• Get rid of “us versus them”

• Build a brand new culture

We are Office Depot, Inc.

Connecting the Lessons

• People take different paths to reach the same destination.

• Throughout life, you will meet new people and say goodbye to others.

• Embrace and adapt to the new people and experiences.

• Learn from those around you.• Choose who you surround yourself

with carefully.• The person/student/leader you were

before must change if you want to continue to succeed.

Acquisition Case Study




Our CompanyA Review of our Heritage, Values, Principles, and Growth

Company Heritage

• Founded in 1897 by Jerome M. Smucker

• Headquartered in Orrville, Ohio

• Leading North American brands

• Five generations of family management

• Commitment to quality and consumer trust

Our Purpose

“Helping to bring families

together to share

memorable meals and moments”

Basic Beliefs

The Company’s values and principles that guide both strategic decisions and our daily behavior

• Quality

• People

• Ethics

• Growth

• Independence

“The mutual respect for our fellow employees and

an atmosphere that makes people proud to work here.”

• “Thank you” for a job well done

• Listening with full attention

• Looking for the good in others

• Having a sense of humor

Core Competencies

Ability to Implement

Developing Strong Relationships

Building Emotional Bonds

Our Vision

We will own and market food brands that hold the #1 market position in their respective category

Transformation Through Acquisitions

2007

Calendar Years

2002

2004

2006

2008

2011

2012 2013

Transformational Growth

Net Sales in Billions

Coffee, peanut butter and fruit spreads

contributed 2/3 of the $5.9 billion

in FY13 net sales

Coffee

48%

Peanut Butter

13%Fruit

Spreads

6%

Baking Mixes& Frostings 6%

Shortening& Oils

6%

Canned Milk4%

Flour & Baking Ingredients

4%

Other

13%

Smucker FY13 Sales by Category

A Leading U.S. Shelf-Stable Food Manufacturer

Strength of Smucker

• Culture and continuity of management

• Clearly defined strategy

• Portfolio of leading brands

• Proven ability to execute

• History of long-term growth

• Strong cash generation and responsible deployment

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 resources

Transformational

Bolt On

Enabling

40

The Integration Process

• Vocabulary & Acronyms • Synergies versus run model improvements • Dual systems Supply Chain Planning

• Face to face communication…a 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 integration

Challenges

Overcoming the challenges

Lessons Learned

41

The People Side of AcquisitionsDeveloping Strong Relationships is a Core Competency• Face to face communication is primary method of

communication.

• Transparency with Communications is critical - Tell people 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.

Thank You!

Human Side of Change








How do you engage, inspire and motivate people during mergers, acquisitions and divestitures? Q:





How do you meld/create new cultures or deal with situations like co-CEO? Q:

Thank You!

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Download - CSCMP 2014: Planning Through Mergers & Acquisitions

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