Editor’s Note: Over the next few weeks on CPO Rising, we’re publishing some “best of” 2022 articles as we reflect on the year and prepare for the new year ahead.
Our “Procurement Experts on CPO Rising” series continues today an excerpt from my 2021 episode of the Procurement Rising Podcast – Alejandro Gusis, Univar (click to listen to the full interview). Note that this excerpt has been edited for readability.
Managing M&A with Alejandro Gusis
Andrew Bartolini: Let’s look at M&A because the work you’ve done at Univar is something that more and more Chief Procurement Officers are having to deal with – manage a merger. We’ve been in a merger-driven market for years as companies seek to gain synergies and compete better. Univar wasn’t your first experience in M&A from the procurement side. So, I’m wondering if you have a perspective on what the keys are to driving synergies and achieving a successful post-merger integration… I’m asking that both on the spend and supplier perspective, but then also from a procurement organization perspective?
Alejandro Gusis: That’s a really good question. I mean, I will say the key takeaways there, the number one is transparency. I mean, the company, both now and in the past, spend a huge amount of time and resources in change management and the change management is not only internal, but it has to be external as well. You want to maintain your vendors and keep them aware of what is going on with M&A. The same thing is true for employees, some of whom may be fearing for their job. Some vendors fear that the business is going to go away. It has some logic so you have to manage it.
So, you buy from vendor A, we buy from vendor B. Now, we are going to consolidate volumes with just one vendor. So, the number one key for us was transparency. To the risk of over-communicated we kept the vendors very aware of what was happening, what was the timing? If we were going to run RFPs, or negotiations, especially for the critical vendors, we kept them very close to us and we gave opportunities to everybody. Our deal was an acquisition but from the perspective of the vendors, it was more like a merger because everybody had the opportunity to compete for our business.
On this perspective of span, Andrew, you ask us well, we didn’t have tools at that time. I mean, we were making extractors of SAP and doing a lot of the analysis in Excel. So, one of the conclusions after that was, we need a more serious tool to do analytics. So, we did an RFP, we did demos with all the vendors. We had the necessary financing so we were able to select a tool, that I’m happy to say has been successfully implemented. Everything in the America is undergoing a larger, more global review for both legacy companies. So, for the last six or nine months, we have a very good perspective of where are we spending? What are we spending and we can now go drill all the way down to line-item level?
From the people perspective, as I mentioned before, again, transparency is the key to getting to know your teams from your side (who you already know) and from the other side (who you don’t). It is important to be very transparent with them from the start, especially if there are going to be some terminations. If people are competing for the same position, you must be very direct and transparent as well. I think Univar Solution treated everybody very fairly. We did not have to do any reduction of people because there was not a lot of overlap between the Category Manager specifically. However, we needed to reallocate some of the task and responsibilities.
AB: It sounds like the lack of a baseline technology platform allowed you to move ahead together with a new process and new technologies. In my experience bringing different procurement organizations together, what I always found was that different stakeholders or different groups, took very strong positions around their processes and felt a need to defend them to the hilt, when the reality was most of the process decisions (whose will we use?) are largely inconsequential to the organization. Did you run into this issue and did you have to navigate any of those types of conversations with the different teams?
AG: No, everything was perfect. No, just kidding. Absolutely we have our first set of challenges as well. From DOA, delegation of authority to what has to have contract and what does not have to have contract to POS or non-POS to usage of P card or non-usage of P card and when I mean, you name it. So, we needed to go as a result of what you are saying about those challenges. We needed also to define new policies and procedures, right? Okay, this is the new policy for the entire combined company and I will recommend to anybody who’s going through that, and don’t make those decisions in day one. Hear what everybody is saying, take your time decide for the company, the new institution, the new company, what is best. Because even you may have plan A or plan B, maybe the right answer is something in the middle, or something different than Plan C. So, what I would recommend to take your time, maybe three, six months into the integration, I mean, then start making those decisions. In other words, the right policy once you to fully understand the entire picture.
To hear the full conversation, click here – The “Procurement Rising” Podcast – Alejandro Gusis, Univar Solutions
MORE CPO TOPICS
Procurement Experts on CPO Rising (Deploying Technology During a Pandemic)
Procurement Experts on CPO Rising – The Procurement Diagnostic
Procurement Experts on CPO Rising (A Modern Approach to Source-to-Pay)
