In spite of economic woes over the last few years, the fragmented wholesale distribution marketplace has continued to consolidate. For some smaller distributors, it’s been a good time to move on, or salvage an ailing business; and, for larger ones, a good time to buy. Acquirers have been able to grow geographically, tap into new markets, or strengthen their market position.
A recent Industrial Supply Magazine article we referenced in April called “Buying Spree” overviews some of the recent activity and notes that the rest of 2011 should bring more. This is in line with what we’re seeing in our travels, like with D&D Tool and Supply, who we recently visited to conduct a UFO training session.
So, maybe your company has acquired a business, or is seriously considering doing so; and, you’re thinking, “Now what?!” Typically, much strategic thought has gone into the “who” and the “why” at the executive level, but the “how” is left up to management to make it work. Operationally, the details of integrating one or more new locations can be challenging. And, it shouldn’t be taken lightly.
As a consulting company, we’re often called in to assist in this process. Just this year, we’ve brought new branches onto Activant Eclipse for three different companies. This has been like a “coming home party” of sorts for us, as Zerion’s roots are in Eclipse implementations. And, although we’ve been talking about this in terms of acquisitions, many of the same principles apply to opening a new branch due to organic growth.
These recent projects have reminded us of our tried and true approach to implementations. It also prompted us to think through some additional suggestions for acquirers. Here are some crucial ways you can make a new branch more successful:
- Treat it as a completely new conversion. Even though your whole company isn’t transitioning to a new ERP, THEIR “whole company” is. Regardless, every implementation, big or small, should be given the same kind of attention and focus as the next.
- Plan it. Don’t get caught up in the outcome before you focus on the input. That means having a (good) project plan, and spending time on preparation before the conversion. We typically start with a 1,000 line project plan for any implementation.
- Inventory IT. IT can be hit from multiple angles in an acquisition. The first step should be to analyze the acquired company’s hardware and network. Much like with people and process, you can determine where there are gaps, overlap and opportunities.
- Account for overlap. It’s sad, but most acquisitions result in some duplication. Ensure that those who are staying are properly trained on the software, and in their position, before anyone is let go.
- Count on disruption. Any ERP change is serious change, as your ERP system is so engrained in what you do. While managing the change properly can minimize disruptions and maximize outcomes, you still have to factor in some business impact.
- Make a process mash-up. Integrating an acquisition brings processes to the forefront. And, you shouldn’t always assume that your way is the best way. Just because “they” were acquired, doesn’t mean they were clueless about distribution. The acquired company can bring to light new and worthwhile processes. We encourage you to take the good with the bad and use this time of change as an opportunity to re-evaluate how you operate.
- Demand consistency and communication. An extremely important aspect of being successful is delivering the same message to the organization, particularly throughout training sessions. Consistency and over-communication will ensure processes are followed properly; and, it provides a warm and fuzzy during a time of uncertainty.
- Train people to work outside the vacuum. Bringing a new branch into the fold creates opportunities to leverage and optimize resources. Inventory is a good example. However, your staff needs to be trained to recognize and utilize these advantages. We recently worked with Jack Cohen from BAC Sales in New York to convert a new location to Eclipse, and he echoed this sentiment. He said, “You need to train your order entry staff to flip between multiple branches to make sure the customers’ needs are fulfilled. The key is the training.“
- Rely on experts. If possible, get an outside resource involved to oversee the project and look out for your company’s best interests. This may be someone like us; or, it may be us plus some. Whichever direction you choose, know that internal staff are typically stretched too thin already, especially to give this type of change the proper attention it needs (as referenced in tip #1). An outside firm who specializes in conversions can provide insight on everything from project management to training to go-live support. They can also act as a messenger and an outside perspective that helps to “sell” the new employees on the change. Jack from BAC Sales agreed, noting they “desperately needed Zerion’s help,” because “it would’ve been practically impossible to do the conversion without the additional support.”
Best of luck with your current or future acquisitions! Let us know if we can help.