Synergy opportunities after acquisition

The need to identify the synergy opportunities between the two companies from a transportation management and organization perspective.

Assignment

After a major acquisition our client wanted to identify the synergy opportunities between the two companies in North America from a transportation management & organization perspective.

Questions that we needed to be answer were:

  • What are realistic scenarios from organizational perspective to manage the transportation (NAM in- and outbound ground transportation)?
  • Can one transport management organization manage all flows, volumes and carriers or should this be split over multiple partners?
  • What are other realistic scenarios to be analyzed?
  • Which organization structure, systems and resources would be required?
  • What are the anticipated benefits from both a cost and quality perspective?
  • Indirect cost of managing North American transportation
  • Direct transportation spend
  • How can the company successfully implement and transform toward the new organization?

Project summary

Our Client, a large multinational in industrial electric motors, generators and mechanical power transmission products. They recently acquired another big corporation in North America. Both companies have an extended number of manufacturing sites across the US and Canada. Our client ships direct to customer from the manufacturing plants whereas the acquired company has an extended network of distribution centers over the region. Our client has expressed the need to identify the synergy opportunities between the two companies from a transportation management and organization perspective.

Our approach

We conducted the project via a 5 step approach:

1.       Kick off, familiarization and brown paper mapping of the current operations including:

  • Alignment on project management, governance and key milestones
  • High level supply chain mapping of both companies
  • Definition of the data & information request

2.       “As-Is” mapping and transport solutions opportunities (baseline):

  • Deep dive in current flows, services, modalities, spend, processes & requirements
  • Current organizational set-up mapping of both companies
  • Identification of (high level) freight solutions opportunities including qualification

3.       Design workshop for alternative transport management scenarios set up:

  • Benchmarking on other best-in-class companies manage their North American freight, including various control tower concepts and details
  • Scorecard of the current set up, including ‘what needs to improve’
  • Workshop with our client to review the baseline and identify organizational scenarios that can manage and capture savings identified under step 2

4.       Analysis of alternative management scenarios:

  • Detail the alternative scenarios, including e.g. which functions central vs. decentral, which processes, split among operational, tactical & strategic processes, which systems & IT tools, which capabilities needed where, etc.
  • Detailed assessment and qualification of the alternative scenarios
  • Analysis in terms of costs, headcount, locations, systems, functionalities, competences, complexity to change considering current set up & labor, etc.

5.       Business case, roadmap to implement and Senior Management presentations:

  • Final conclusions & recommendation
  • Creation of the business case and the roadmap to change
  • Detailed reporting & summary reporting for senior management buy-in

Result

Our final recommendations included amongst others: 

  • The set-up of a combined, centralized transport management Control Tower for both businesses for all strategic and tactical functions.
  • Daily operations for all FTL, linehaul and LTL operations should be combined in the centralized control tower.
  • Daily transport operations for small local DCs of the acquired business will not be included in the control tower. However, these local DCs shall operate on the same (future) TMS; this will allow visibility and improvements (cost, service and performance) through the optimization of strategic / tactical processes.
  • Due to lack of in-house competencies and other human resource related reasons, we recommended to set up the centralized control tower at one specific defined site from our client.

The key benefits for our Client:

  • Leveraged transport management solutions and harmonized processes for both companies.
  • Transport solutions aligned to better meet individual customer requirements.
  • Transparent and optimized costs.
  • Platform for in- and outbound freight management and visibility, including pro-active exception management.
  • Strategic carrier and performance management.
  • Continuous improvement of cost and performance.
  • Create a platform to leverage distribution networks.

The implementation roadmap included a phased approach and identified a route to start with “low hanging fruit”, and continuing step by step expanding to all businesses and sites.