Picture this: you’re a manufacturer that’s had a great year and you want to continue growing your business. Rather than start building plants to increase the rate of production, you decide to start buying off companies that can help with the workload. After you sign a few contracts and have your IT team work their magic, you’ll be above your initial production capacity in no time.
Unfortunately, plants aren’t always compatible out of the box; in fact, some integrations may be a long and expensive headache that you weren’t prepared for.
Here to help you through this process, D4M International’s COO Jean-Yves Durocher will give you a brief overview of the MnA process, common pitfalls during the process, and how D4M International can help ease the process.
Jean-Yves: MnA is a long process and costly process, but – obviously – nowadays, the fastest way to grow and grab market share is pretty much to do acquisitions that are complimentary to your business – or buying your competition outright. Mergers have a direct impact on our activity at D4M, as we do provide assistance to companies who are buying or selling or both.
Jean-Yves: In every merger, there’s a buyer and a seller, and we are very active in both. On the buyer’s side, we often assist corporations to navigate the process, not only from a planning perspective – and any necessary hand holding as, in many cases, companies may not have all the expertise or the bandwidth to tackle an acquisition.
Jean-Yves: An organization only has a certain number of employees to assign tasks; if everybody’s busy working on other projects, it’s quite rare that a company could absorb this workload within their normal operations – especially, with such a big undertaking as merging of all your technology between two plants together. It always creates a very significant spike in project and activities that the typical IT department doesn’t normally have the capacity to handle; in addition to everything they need to do on a day-to-day basis.
Jean-Jacques: Okay, so – long and short of it – a lot is happening in the field of MnA. So, this leads us, I suppose, to the first question of the day, which is, could you break down your thoughts on MnA and how exactly it pertains to the industry of digital manufacturing.
Jean-Yves: So, if you want to know what it means for manufacturing industries, it depends on the type of acquisition. An acquisition could be done so a corporation can try to expand their product line with new product, or, in some cases, could be a matter of increasing capacity.
Jean-Yves: It really depends on which form the merger/acquisition takes. But, all in all, there is always a significant impact at the manufacturing level – especially when it comes to process integration. From a production perspective, your organization might be buying a company that produces parts that you will need in your global manufacturing assembly process. Regardless of the purpose of the transaction or how it will benefit your company, they will have in some way be integrated in a new global process.
Jean-Yves: So, it’s unlikely that you could leave everything as is. In order to benefit from the acquisition, one must maximize the potential advantages from the merger as possible as there’s always advantage in doing some integration. So, for manufacturing, it could mean again, the scheduling; it could be you have to readjust your scheduling process with the purchasing as well.
Jean-Yves: You might see an increase of volume for a certain type of parts that may required renegotiation of a purchasing agreement, or procurement, and so on. Basically, there is some synergy that – at the end of the day – if you take advantage of the synergy can go from passive to activate synergy.
Jean-Yves: There is always a behind-the-scenes a technical component that will benefit your company in the long run. It might be your purchasing system. It might be your ERP. It might be your scheduling system. But, nowadays, every time that you try to adjust or merge processes automatically, there is an application. There’s a system behind that will get impacted.
Jean-Jacques: And as far as D4M is concerned regarding M&A, when exactly does D4M come into the picture? Say company A is buying company B; when abouts do you guys come into the process? Is it strictly in an ERP/digital manufacturing capacity only? I’m assuming you guys become involved in M&A when it comes to companies during the buying-out and merging of plants, is that correct?
Jean-Yves: Where we come in the picture and could assist corporation comes in many forms. It could be during the due diligence where we would come into a project with the client with our own methodology/checklist. Afterall, these project that have a lot of details to go through to say the least.
Jean-Yves: There’s no such thing as looking at due diligence from a 20,000 feet. It’s a typical situation where the devil is in the details; so, we could assist the client by bringing our approach, our process and our checklists. These are checklists that will cover every single aspect that needs to be looked at as part of the due diligence process.
Jean-Yves: At the end of the day, this is done to avoid any surprises down the road; where you thought what you were buying a plant that included system A and B and or this ERP. But, even with something as simple as an ERP, there’s different modules, there’s features, etc. that they may be dealing with that you didn’t know about. So, I think you need to look at in more detail to see what you’re buying before you proceed so we can assist during due diligence by coaching through the process via the checklist and guiding the client through the merging process later on.
Jean-Yves: Once the transaction is completed, we can help the client execute the transition plan because one of the deliverables that will have to be developed early on is a transition plan. So, we could not only assist the client in helping making the transition plan a reality, but later on to execute the transition plan once the acquisition is done.
D4M is a privately owned company specializing in leveraging digital technologies to accelerate manufacturing clients to their transition to Industry 4.0. With long tenure and hundreds or successful projects, we are confident that our approach and experience provides the roadmap to help bring clarity and efficiency to your manufacturing operation.
To find out how we can help with your SAP environment, or to learn more about how we rolled out SAP to 60 locations in 60 months, reach out to us today. Contact form and office numbers listed below.
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