Partner Article

Streamline efficiencies to support M&A success

Analysis from KPMG (2017 Global M&A Predictor) has shown that mergers and acquisitions (M&As) are set to increase by 12 per cent over the next 12 months. With the climate of economic uncertainty surrounding Brexit, it is no surprise that more and more businesses are turning to M&As as a means of increasing market share, reducing competition and improving overall performance. However, in order to maximise the cost savings to be gained from consolidating company resources, procurement leaders and facilities managers (FMs) should give careful consideration to ways of streamlining procurement activities, strengthening supplier relationships and rethinking office design.

Economies of scale

While mergers often prove cost-effective in the long-term, allowing companies to make savings and reduce overheads through shared budgets, businesses will still have to negotiate the initial transactional burden associated with undertaking an M&A deal. One way in which FMs can reduce the financial impact of acquiring a company is by taking advantage of purchasing economies. In addition to discounts associated with purchasing goods in bulk, reducing numbers of orders can also allow procurement leaders to make valuable cost savings through minimising both hard and soft delivery costs. However, when taking advantage of economies of scale, it is important for FMs not to build up huge buffer inventories, which can take up space and bind up much-needed capital. Instead, businesses should aim to forecast demand levels as accurately as possible, allowing stock levels to be managed intelligently and all-important cashflow to be maintained.

Strengthening supplier relationships

Strong supplier relationships are central to the task of streamlining efficiencies following a buyout, providing opportunities for FMs to review existing agreements, leverage greater buying power and scope out new opportunities. Following a merger, auditing current suppliers and looking for opportunities to narrow the supplier base should be at the top of an FM’s agenda. By using single providers for multiple products, businesses will have greater visibility over their purchasing and orders, spend less time and administrative resources in making multiple orders and be able to minimise the overall supply chain risk.

Monitoring suppliers’ service levels constantly will allow dips in service quality to be identified before client delivery is compromised. As part of this, clear and achievable goals should be set from the start of the supplier relationship, including specific service levels and KPIs. FMs should also not underestimate the importance of quality communication in developing rewarding supplier partnerships. By maintaining a contact dialogue with all levels of the supply chain, businesses can build personalised, trusting supplier relationships which offer valuable flexibility further down the line.

Remodelling offices

Integrating the corporate real estate of two companies can provide an effective way for businesses to realise quick cost reductions whilst boosting long term efficiencies. As part of this process, it makes sense for FMs to also consider how best to make use of available space through smart office design techniques. With a move away from fixed workstations, as well as staff increasingly looking for flexibility within their working environment, modular furniture and movable partitions are a key trend for FMs to be aware of when looking to maximise existing office space. Using flexible furniture allows employees to adapt the workspace in accordance with their changing requirements, whether that is a need for privacy or the ability to conduct a group discussion. This means that companies can significantly reduce the amount of unused space by reducing the number of permanent meeting rooms required. With many workers now using laptops or slim-line monitors, procurement professionals should also consider replacing large workstations with smaller alternatives. While it can be tempting to assume that innovative office trends such as hot-desking are always more effective than traditional alternatives, FMs should consider their compatibility with individual business requirements to prevent workforce productivity being compromised upon implementation.

With an increasing need for businesses to navigate geopolitical risks and mitigate the impact of global protectionist policies, careful planning ahead of an acquisition will allow FMs to mitigate the initial financial impact and protect against unforseen risks. As long as FMs take steps to increase economic and spatial efficiencies within the organisation, mergers can provide an effective and speedy means of fuelling business growth whilst also helping companies to stay ahead of the competition.

Nigel Crunden is a business specialist at business solutions provider Office Depot.

This was posted in Bdaily's Members' News section by Office Depot .