One of the key learning points for me, whilst leading our merger has been the importance of our supply chain. It is easy to get distracted by core business where both entities have absolute control, and miss the significance of the role of suppliers. In my view, to optimise merger benefits the preparation of the supply chain is paramount. A well-prepared supply chain can deliver savings and support business critical processes, in particular IT systems. Here are I share my three rules of thumb:
The golden rule of merging supply chains is that the resident or customer should experience no disruption in their service.
1. Plan, plan, plan – make sure you understand your supply chain well in advance and identify both the key areas for procurement savings AND the business critical suppliers who can make/break your integrated processes.
Assessing the entanglement of suppliers and stakeholders across both organisation supply chains allows you to assess risk, agree mitigation and decision-making processes well in advance. Decision-making is important; if a supplier is struggling to deliver what your organisation needs to be able to integrate, you need to agree when/if/how to pull the plug and how you will fill that gap if you need to.
Bringing your suppliers into the planning process at the earliest opportunity can help with identifying potential cost savings that can be achieved by integrating. It can also help with setting milestones and goals that suppliers can meet. Finally, suppliers may be able to identify added value that may not have been considered.
2. Understand and maximise your relationships – the post-merger period is the perfect opportunity for suppliers to demonstrate their ability to add value to your new organisation. This can be used to great effect tactically to drive value for money as well as improve service.
Relationships with suppliers during integration are crucial. I have witnessed first-hand a poor supplier who has obstructed and potentially delayed a key project to enable our successful integration. Working with suppliers up front and developing these relationships can avoid this; explain how they link to your programme plan and where you expect them to deliver.
Where you are providing very different services, it is OK to continue with two supply chains, at least in the short term as this can help to avoid disruption. The balance here is cost saving versus impact on customer/resident service.
3. Data is king – During a merger you cannot rely on guesswork, you can only rely on data. A successful integration of systems and processes will always depend on the quality of the data which can be shared with your supply chain. For example, at Notting Hill Genesis we both use the same underlying housing system; however we use it very differently. To enable us to come together we have needed to understand the differences, agree the business critical data points and cleanse the data (this is a mammoth, resource- intensive task and must be factored into any merger timeline).
Finally on the data point, it is often difficult to identify the person in the organisation who understands the data e.g. account coding structures, housing hierarchy. Ensuring you have good data governance and data ownership as part of your planning process upfront can help to mitigate this.
In summary working with your suppliers well in advance and throughout the merger process will optimise your chances of successful integration.