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CSCMP 2014: Planning Through Mergers & Acquisitions
- 1. Planning Through Mergers & Acquisitions
- 2. It’s a MAD World MAD – Mergers, Acquisitions, Divestitures Through June 16, 2014
- 3. It’s a MAD World Linear Projection at Current Rate
- 4. 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
- 5. Great Panelists Craig McLaughlin Global Director Integrated Business Planning Larry Hartley SVP Supply Chain Ron Hord VP Supply Chain Planning & Contract Manufacturing
- 6. Case Study in Divestiture Craig McLaughlin Global Director Integrated Business Planning Larry Hartley SVP Supply Chain Ron Hord VP Supply Chain Planning & Contract Manufacturing
- 7. Approx $52 billion Global portfolio Approx $35 billion Global portfolio Divesture - Scope Approx $17 billion North America portfolio
- 8. We offer many of the world’s favorite brands
- 9. 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
- 10. Divesture – Planning Challenges People • Assign the most qualified operations resources on Processes & 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 talent retention in building new teams. • Ensure people training is focused on for Day 1 capability needs.
- 11. Divesture – Approach Establish a formal dedicated team for each function Functional Steering Team Functional Project Lead Human Resources Focus Areas Communication Org Design & Structure Retention Motivation Reward Facilities Change Mgmt Customer Service Focus Areas Policies/Work Processes System split Cross-country Alignment Sales Alignment Customer communication / new vendor set-up Customer Finance Focus Areas Systems Work Processes AP/AR by sector Post audit Cross-country alignment TSA Product Supply Focus Areas System /Data Split SAP Demand/Supply Network Replenishment Materials Mgmt BU Alignment SME needs TSA Logistics Ops Warehousing Wendy Focus Areas Strategy Systems Capital/Asset Leases 3PL vs owned Cross-country alignment TSA Transportation Wendy Focus Areas Trans Planning impacts Systems Work Processes Procurement Vendor Mgmt Route to Market TSA Global Steering Team
- 12. Divesture – Approach Measure 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”
- 13. Divesture – Approach Check dependencies often Planning Finance Manufacturing & Logistics Sales Legal
- 14. 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.
- 15. Merger Case Study Craig McLaughlin Global Director Integrated Business Planning Larry Hartley SVP Supply Chain Ron Hord VP Supply Chain Planning & Contract Manufacturing
- 17. Coming Together
- 19. Freshman Year
- 20. 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
- 21. 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
- 22. 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
- 23. 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
- 24. 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
- 25. We are Office Depot, Inc.
- 26. 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.
- 27. Acquisition Case Study Craig McLaughlin Global Director Integrated Business Planning Larry Hartley SVP Supply Chain Ron Hord VP Supply Chain Planning & Contract Manufacturing
- 28. Our Company A Review of our Heritage, Values, Principles, and Growth
- 29. 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
- 30. Our Purpose “Helping to bring families together to share memorable meals and moments”
- 31. Basic Beliefs The Company’s values and principles that guide both strategic decisions and our daily behavior • Quality • People • Ethics • Growth • Independence
- 32. “The mutual respect for our fellow employees and an atmosphere that makes people 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 Competencies Ability to Implement Developing Strong Relationships Building Emotional Bonds
- 35. Our Vision We will own and market food brands that hold the #1 market position in their respective category
- 36. Transformation Through Acquisitions 2007 Calendar Years 2002 2004 2006 2008 2011 2012 2013
- 37. Transformational Growth Net Sales in Billions
- 38. A Leading U.S. Shelf-Stable Food Manufacturer Coffee, peanut butter and fruit spreads contributed 2/3 of the $5.9 billion in FY13 net sales Coffee 48% Other Flour & Baking Ingredients 4% 6% Baking Mixes & Frostings 6% 13% Fruit Spreads Peanut Butter Shortening & Oils 6% Canned Milk 4% 13% Smucker FY13 Sales by Category
- 39. 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
- 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 resources Transformational Bolt On Enabling 39
- 41. 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 40
- 42. The People Side of Acquisitions Developing 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.
- 44. Human Side of Change Craig McLaughlin Global Director Integrated Business Planning Larry Hartley SVP Supply Chain Ron Hord VP Supply Chain Planning & Contract Manufacturing
- 45. Human Side of Change Craig McLaughlin Global Director Integrated Business Planning Larry Hartley SVP Supply Chain Ron Hord VP Supply Chain Planning & Contract Manufacturing How do you engage, inspire and motivate people during mergers, acquisitions and divestitures? Q:
- 46. Human Side of Change Craig McLaughlin Global Director Integrated Business Planning Larry Hartley SVP Supply Chain Ron Hord VP Supply Chain Planning & Contract Manufacturing How do you meld/create new cultures or deal with situations like co-CEO? Q:
- 48. Don’t Forget to Complete the Evaluation! Download the conference app and rate this session. Start by choosing: “Cornerstones and Tracks” on the main menu and follow the prompts to this session’s landing page.