January 15, 2015
Ensuring Product Quality and Consistency After a Merger or Acquisition
By Rick Sloop
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After a merger or acquisition takes place, there is often speculation about the cultural fit of the two companies coming together; for example, the media and stakeholders ask whether or not the smaller company will be enveloped by the larger one and whether the deal will help or hinder the growth of the companies involved.
Arguably, the most important question comes from the customers themselves – will I still be able to purchase my favourite products and will they be the same quality as they were previously?
Customers are often sceptical of their trusted brand after it has been bought out by another, so the newly formed company is under immense scrutiny and must get its products right the first time or risk losing even the most loyal customers to the competition. It is essential to ensure the products – and the technology and processes that help produce them – remain consistent and retain the same level of quality that customers expect.
It’s all about consistency and visibility
Achieving this consistency can seem daunting. By their very nature, mergers and acquisitions bring two companies together, which means at least two sets of processes, products and quality control practices – and that’s before tackling the layers of disparate technology that may be in place. It is not practical or cost effective to impose a single standard across a newly formed company either by ripping out and replacing all your equipment or via expensive hardware and/or software upgrades for all of your different product lines, facilities and supply chain vendors.
Instead, businesses stand to benefit – and save all important time and money – by centralising their manufacturing data from these multiple sources into a single point of quality control. In essence, creating an accessible ‘quality hub’. In addition to aggregating shop floor and quality data – which ranges from product attributes to weight and safety checks -- from multiple sites, the hub collects data from disparate systems across the manufacturing facility and unifies the data into one point of visibility with uniform metrics and easily viewed charts and reports.
These reports paint a clear, real-time picture for everyone from shop floor operators to the boardroom, showing what’s working and what needs improvement. By assimilating data from every plant and production facility across the new organisation, the quality hub can also help identify data inconsistencies, which -- if left unchecked -- can lead to inconsistencies in product quality.
Big data, small changes
It may be tempting to dismiss data and quality reporting to the realms of the IT department and quality managers, but it is as essential for the management team as it is for those on the shop floor assembling products. If those inconsistencies result in wasted time or poor product quality, they will impact the company’s bottom line. As such, it is in the management team’s best interest to implement standard procedures and reporting – even at the shop floor level – to ensure they can easily analyse and compare performance and quality across lines, departments or plants.
Managing the cultural shift caused by even small changes to a business or day-to-day routine of the staff is a delicate matter, let alone dealing with those brought about by a merger or acquisition. Using a quality hub to unify the complex mix of processes, people and technology gives companies a point of control during the merger and acquisition process. Having access to all the information required at any given time makes it easier to implement small changes. For example, standardising the description of a chocolate bar to ‘small’ or ‘medium’, instead of ‘bite-sized’ or ‘jumbo’, which may have been used previously by one of the companies. A change, yes, but a small one that provides a clear picture into the production and sales of a specific product across the entire organisation.
Quality in action
We recently worked with a snack foods company with an existing quality hub. The company had recently acquired a new production plant and its employees viewed the company’s centralised system with a fair amount of scepticism. To combat this, the company invited its new employees to its main plant so they could see first-hand the quality hub in action. Upon seeing how much time the software saved and how much easier their jobs could be, they embraced the change in process. The company ultimately saved more than $1m in product waste in its first year and to reduce customer complaints by 30 per cent, proving that small changes can make a big difference.
At the best of times, growing businesses can become victims of their own success. The implementation of various tools, techniques and processes over time can easily produce confusion and inconsistencies. This ‘data chaos’ is magnified after a merger or acquisition and can leave a new business even more vulnerable when all eyes are on its performance and products.
Bringing order to this chaos can be effectively managed by centralising data and making it visible across the new organisation, giving everyone from the CEO to a production line manager visibility into the products being created – ensuring they live up to the standards consumers have come to expect.
Rick Sloop is part of the Technical Services team at InfinityQS.