Distribution network convergence offers a better starting point for mergers and acquisitions than focusing first on synergizing manufacturing processes due to lower business risk and higher value. The document outlines steps for planning distribution network convergence which include profiling operations to understand convergence capabilities, benchmarking costs of the merged organizations, and blueprinting a distribution strategy with short and long term consolidation areas identified. It also provides a five step pathway for identifying the right third party logistics partners including establishing global guidelines and ensuring thorough operational profiling.

1. | Copyright © 2016 Tata Consultancy Services Limited
Leveraging Distribution Network
Convergence to Maximize M&A Value
Consulting and Enterprise Solutions

2. Collaborate. Consolidate. Co-innovate.
Over $402.9 billion worth
of deals closed in 2015,
versus
$169.3 billion in 2014.
94% senior executives at
life sciences
organizations are
considering a merger in
2016

3. Factors Influencing M&A
Portfolio growth and diversification
pressures
Competitive instincts
The power of collaborative performance

4. Ensure Seamless Transition
Distribution network
convergence and
outsourcing
Optimized resource
use
Improved purchasing
power
Enterprise consolidation
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5. Prioritize the Order of Change
While supply chain executives usually focus on
synergizing manufacturing processes first, this
is more disruptive with high business risk.
Distribution network convergence, on the other
hand, offers high value with low risk, making it
a better starting point.
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6. Plan Distribution Network Convergence
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Profile and segment
operations to understand
distribution convergence
capabilities
Contrast activity based
costing of merged
organizations with a
benchmark for data
comparison
Blueprint a distribution
network strategy with a
short- and long-term view of
gains to identify areas for
consolidation
Balance outsourcing and
insourcing of functions based
on financial, operational, risk, and
cultural factors. Assign non-core
capabilities to 3PL providers for
flexibility and cost optimization

7. Identify the Right Partners: A Five-Step Pathway
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Establish global
guidelines for
3PL services
Create global
templates and a 3PL
sourcing playbook
Ensure thorough
operational
profiling
Perform cost
modelling and
analytics
Create a standard
quantitative
response template
01 02 03 04 05

8. Sustain Operational Excellence
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With an established framework in place when considering a merger, organizations can reorient performance
without disrupting existing operations and drive informed decisions.

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Leveraging Distribution Network
Convergence to Maximize M&A Value