27 January 2000 | David Arminas
Purchasing professionals have much to offer in merger and acquisition discussions, but they must ensure their views reach and interest the boardroom, experts warned the Supply Chain Expo 2000 in London this month.
Stephen Cannon, head of CIPS's technical services, told delegates: "If you really want to cut some ice with top management, you have to relate what you are doing with what their interests are."
Cannon told SM: "Often top management is focused on the markets it is going to get. I haven't seen any media splashes about, for example, the big advantages that mobile phone companies Mannesmann and Vodafone will get from amalgamating their purchasing functions."
While purchasing and supply managers can provide a valuable insight into mergers, there must be an effort from top management to include supply chain personnel, said Steve Huggins, purchasing manager at ISDN transformer manufacturer Advanced Power Components.
Juliet Johnson, a former purchasing manager and now a business analyst at software consultant Computer Associates, has experience of being in a company's purchasing department when the firm acquired another company.
"All the dealing was done at board level and then presented as a fait accompli," she said. "You then have six weeks to integrate the supply chain and product into the business - taking on everything from purchasing and manufacturing in the plant, to understanding the forecasting and sales order pattern. The pressure is on."
Hidden supply chain expenses can appear because the procurement department might not have the skills to integrate the product smoothly, said Johnson. This is the "pain period", "when you put the supply to your regular customers at risk. You take your eye off the ball for the whole supply chain," she added.
Having purchasing people at board level can avoid the worst excesses of this period, Johnson said.
Resources are often duplicated following a merger and the time spent by supply chain managers rationalising the new systems can be an unforeseen expense, insisted Alan Waller, partner at PricewaterhouseCoopers' international supply management practice.
"Mergers have a huge impact on the supply chain, especially on manufacturing, transport, warehousing and inventory," he said.
One reason supply chain professionals are not consulted is that they are still often seen as logistics managers, rather than people with an overview of the total supply chain, said Robin Martens, a director of supply chain and merger consultancy Jonker Advies in Rotterdam.
"Top management usually thinks in terms of market share and economies of scale because margins are getting slimmer," he added.