How Mergers and Acquisitions Strategy Can Supercharge Procurement Function

Merger and acquisition (M&A) is a tried and tested strategy for enterprises to grow and expand operations beyond what was originally thought possible. By combining the strengths of different entities, a new organization is created with an aim of creating new products or services that are more profitable and successful than the earlier lineup under separate entities.

M&A inherently escalates demands for elevated procurement performance given expanded scale, hybrid cultures and intensified savings goals. However, the consolidation event equally signifies definitive opportunities for revamped procurement groups to champion enterprise-wide transformations beyond conventional transactional responsibilities.

This blog post examines key milestones through the merger and acquisition strategy continuum where procurement leaders can harness enlarged charters for generating value and spearheading innovations earlier tricky due to limited breadth. Essentially, turbulent periods caused by heavy reorganization unavoidably enable next-generation procurement mandates. The onus lies with the chief procurement officers (CPOs) to convert potential energy into dynamic impact on the entire organization.

Why M&A Magnifies Procurement Responsibilities

While motivations for M&A stem largely from business growth visions by leadership, expanded procurement accountabilities automatically feature due to:

• Added spend categories, supply risks exposures and regulatory diligence needs post consolidation
• Cultural reconciliations across merged entities to balance continuity with change
• Reliance to dependably deliver against heightened savings goals publicly committed
• Expectations to prevent work stoppages by ensuring supply continuity amid reorganized structures

This level of exposure serves as a game changer for competent procurement organizations that have the tools at hand to cement structural leadership transformation well beyond conventional transaction-focused roles.

Crafting a Compelling Merger and Acquisition Strategy for Procurement

Structuring a compelling multi-horizon procurement influence strategy is vital to materializing the true potential of a freshly minted, enlarged entity. The procurement roadmaps to deliver results include:

• Bolstering credibility by hitting first 100-day synergy capture milestones through process harmonizations with detailed savings tracking
• Pursuing enterprise-wide e-procurement platform standardization for consolidated analytics capabilities allowing consistency in policies and decisions
• Incubating supply chain innovations centers of excellence to nurture differentiated partnerships only feasible due to new organization’s expanded muscle power and priorities

Sustaining Relevance Through Continual Efficacy

While procurement teams quickly achieve initial integration milestones in line with the merger and acquisition strategy, the spotlight itself does not sustainably impart procurement leadership equity akin to groups such as sales, marketing or technology that enjoy natural strategic positioning. The onus therefore lies with the procurement function to cement staying powers by demonstrating authentic competency expansions beyond transactional category management, operational excellence or tactical savings delivery where procurement traditionally gets typecast.

Ensuring longevity of elevated procurement positioning post-M&A requires going beyond the usual competencies in order to drive value in areas such as:

Internal Stakeholder Insights: Insights into internal stakeholder aspirations add weight during trade-off priorities to sustain executive air cover and solution co-creation opportunities.

Change Mastery: Migration fluency across reconfigured technology, workflows and policies for continuity help in change management credibility.

Influencer Equity: Thought leadership through published foresights, academic partnerships and industry forums aid procuring choice appointments to strategy sounding boards.

While delivery pressures remain relevant through post-merger phases, seizing key milestones to cement strategic value addition sustains growth transformation trajectories for high-performing procurement functions with foresight to look beyond short-term cost restructuring mandates alone.

Conclusion: M&A Boosts Procurement’s Leadership Equity

Turbulent periods such as mergers and acquisitions or divestitures provide pivotal windows for ambitious procurement groups historically playing second fiddle in strategy blueprinting to grab front-seat roles by enabling continuity and visibility amid disrupted supply base relationships. Business integrations intrinsically elevate the function’s charter, but the C-suite must take care so that the amplified spotlight gets translated into permanent platforms procuring enterprise advancement.

Procurement has the necessary competency to provide a solid counsel to the leadership team on externalized risks and opportunities — through deliberately structured transformation programs sustained through ongoing demonstrations of competencies in orchestration.