DIY vs. Outsourcing: Weighing Options When Acquisitions Require Fast Rework
In 2017, there were more than 37,000 mergers and acquisitions worldwide. Notable deals in recent years have spanned consumer luxury brands to major tech leaders—with Michael Kors buying Jimmy Choo and Dell acquiring EMC, among many others. While companies gain synergies through these acquisitions, they can be an extremely risky move. According to a recent Harvard Business Review report, the failure rate for mergers and acquisitions (M&A) sits between 70 percent and 90 percent.
While many factors contribute to the success—or failure—of these deals, one quality is among the most important: the speed and efficiency at which the two companies can integrate, and supply chain is a critical part of that integration. Regardless of which end of the deal your brand is on, partnering with a strong supply chain can help you play an important role in creating a seamless integration.
Think of the size and scope of updating SKUs and labels alone. A sudden acquisition announcement will require a set of tasks to update all the SKUs and labels in your inventory to integrate with the new company’s infrastructure. Enter rework: the process by which a product is reprocessed in some way to rectify a problem before that product can move towards fulfillment. This could mean rewiring it, repairing it, or in the case of an acquisition that requires updating inventory to meet a new company’s standards, relabeling it.
Generally, rework is unexpected and not within an organization’s well-established production and shipping processes, and it can be extremely complex. When Dell and EMC integrated, the supply chain team had to deal with tens or hundreds of thousands of product SKUs and component parts.
Now, put yourself in their shoes: would you do it yourself, or opt to outsource?
The DIY approach has some appeal. It provides greater control over all the aspects of the project and, if you’re part of the company being acquired, it could be a helpful way to become familiar with the processes and procedures of the new organization. However, this does come with major disruptions to normal processes and a high cost to business operations—both as it relates to existing teams and resources, as well as the need to hire and train temporary workers to provide support.
The other option is to outsource SKU and label rework projects to a supply chain partner. These organizations often have specializations in repair, recovery and returns management, and the best ones have a track record of successfully and quickly helping dozens of major consumer and business-to-business enterprises update and relabel products. They can easily deploy resources in the locations that make the most sense for the two brands involved, without taking up precious time to hire and train talent or ship products to far-off central facilities.
When the pressure is on to move fast and integrate your brand’s products quickly, you can’t leave the project of updating SKUs and relabeling products to chance. ModusLink has helped many companies achieve success and would be happy apply that expertise to your organization to ensure that supply chain integration is an immediate success in bringing together two brands.
Speak with an Expert NOW!GET CONNECTED
Subscribe today and get the latest in Supply Chain, Logistics and eComm from our thought leaders