Business & Technology Nexus

Dave Stephens on technology and business trends

So Your Supplier Has Been Acquired, What Next?

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What should you do when a key supplier you use is acquired?

First off, know that time is on your side. You should expect the acquiring party to do everything they can to continue to earn your business. After all, most acquisitions have more to do with customers than technology.

You should be inquisitive about changes likely to affect new product introduction, timely product delivery, and product support practices. Major cuts in staff or losses in talent are likely to affect the new management team’s ability to perform.

Look for early warning signs such as product delays, supply shortages, and lower satisfaction with customer support as telltale signs that the new team is not performing on par with the old team.

Of course, it’s just as likely the new management team improves on problem areas and increases your satisfaction. The important thing is to measure the metrics of the supplier relationship more closely post-acquisition. Ideally, if you’ve been good about your supplier scorecarding program you can compare the new values to a baseline.

From a systems standpoint, there are a lot of choices about how to reflect the acquisition. Most systems support a “supplier merge” capability – but be careful as this can distort the historical record going back decades – suddenly it looks like you were buying notebooks from HP all along when really, back in 1996, it was Compaq. As an alternative, you can revise corporate buying contracts to reflect new ownership and leave the old records alone. There’s no right answer here.

The good news is, in most markets you can at least entertain switching should the new management bungle the takeover. Sure, switching costs won’t be zero, but the leverage alone should give you enough clout to encourage the new team to fix whatever glitches arise.

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Written by Dave Stephens

08/21/06 9:48 PM at 9:48 pm

Posted in Opinion

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