Procurement and Spend Analysis, a collaborative team member in M&A Strategy

By:  Mickey North Rizza

American Airlines and US Airways announced a merger to be completed later in 2013. The efficiencies the airlines will gain post-merger can be monumental, if done correctly.  Efficiencies and economies of scale leading to real value contribution are by-products of successful mergers and acquisitions (M&A).  They are also great opportunities for Procurement professionals to leverage their strengths and create additional company value.

A common function and tool set utilized during M&A integration is Procurement and the Spend Analysis solution.  Procurement excellence depends upon knowing the spend and suppliers, tying the Procurement strategy to the company strategy and executing to exceed expectations of value contribution in the management of the spend and supply base.

Spend analysis solutions can assess spend and supplier opportunities, track the opportunities realized and identify those opportunities still needing assistance.   Critical data, such as each businesses’ spend characteristics by business unit, division, or cost center; suppliers; and the goods or services purchased, are contained in the spend profiles.   Procurement, as part of a M&A team utilizing the spend analytics solutions, can provide visibility into:

1. Large spend business units, divisions and cost centers to leverage volume and the supply base
2. Planned  vs. actual expenses to curtail spending or find leverage opportunities
3. Categories and commodities with large spend vs. long tail spend
4. Supply base strategies to leverage greater buying power, improve relationships and collaboration.
5. Supply and functional risk mitigation of the merging of supply bases and procurement functions.