The transport sector has been operating under turbulent conditions for the past few years, facing substantial cost increases amid unprecedented global pressures and economic and social disruption. These circumstances come amid wider transformation in the sector, as emerging EV technologies, cleaner vehicle fleet options, and innovations posed by artificial intelligence provide a wealth of opportunity for fleet and transport logistics.
At the same time, the business world is ever-evolving, with organisations constantly searching for routes to increase market share and growth. Mergers and acquisitions (M&As) can be attractive ways to pursue this.
However, handling the post-M&A transition requires careful navigation, and supply chain and logistics operations are particularly complex and require effective management. Consumers need to get their products on time, and this depends on transport and logistics providers continuing to provide their service effectively – or even better than before.
The creation of a new business entity, or the consolidation of two businesses into one, may involve introducing new suppliers, new transport routes or opportunities for consolidation. All of these could ultimately improve operations. However, if they disrupt the day-to-day, they could have catastrophic consequences and potentially compromise future success. In fact, research indicates that 70-90% of M&As either fail or underperform.
Having the right expertise to manage the change is critical in reaping the benefits of a merger or acquisition. Bringing in or redeploying a third-party, objective logistics consultant at this stage to oversee the post-M&A transition can be beneficial and help minimise disruption.
The aim post-M&A is to have a strategy in place that promotes synergy between the merged or acquired businesses, especially across supply chains. There are several factors to consider post-M&A - here are some practical steps to help achieve a smooth transition:
Vendors and suppliers - diversification or consolidation
Undertake an audit of existing fleet providers and the routes they take from warehouse collection to customer delivery. With two business operations coming together, is the transport provider of one more cost-effective than the other? If the merger creates an expanded warehousing network, do transport routes need to be reassessed to consider mileage (and the associated cost and carbon considerations)? Or indeed, is there an opportunity for consolidation of warehousing and transportation?
Whatever decision is made, it’s important to remember that any new providers will need setting up on systems and embedding into the business to minimise disruption.
Evaluate new and existing processes
Merging or shifting away from existing technology systems and interfaces can mean that people and processes experience teething issues. Where significant changes are being made to the supply chain, businesses should consider operating dual workstreams in the first instance, continuing existing operations while distinct, new operations are established.
Making the most of pre-M&A investment
Allocate resources to monitor and optimise what was unearthed and discovered during the due diligence period. This should be an ongoing process as, while adequate time invested in pre-acquisition planning should measure the risks, new challenges have the potential to crop up as markets continually evolve. What’s more, everyday challenges like motorway closures and hold-ups at international customs are commonplace for those tasked with transporting goods. Continually evaluating and monitoring risks is critical to avoid disruption.
When it comes to M&A, there is no one-size-fits-all model and every deal and process can look different. By keeping a close eye on how the deal is unfolding in practice, businesses can foresee challenges before they become a reality and optimise their operational performance.
Phil Reuben is executive director at global supply chain and logistics consultancy, SCALA.
