Is your trucking or logistics company an acquisition target? Or perhaps you’re considering making such an acquisition. In either event, there is a case to be made for the role of logistics IT solutions to help smooth the process of consuming or being consumed. Read on for details.
Front page news from Transport Topics “Trucking, Logistics Acquisitions Expected to Continue in 2015”. The short version is that 2014 came darn close (with 86 trucking and logistics companies acquired) to beating the record of 90 acquisitions set in 2007. The reasons; fleet operators are seeking to lock in capacity amidst a protracted shortage (the so-called strategic acquisition). To a lesser degree, there have been financial acquisitions too wherein investment companies seek to capitalize on the high demand and low supply of drivers.
Logistics IT solutions that provide visibility into OTR transportation and fleet spend are an unspoken force in the decision making processes associated with mergers and acquisitions. For example when a trucking company is bought out, the new ownership immediately begins to assess the overall condition of the existing processes and practices within their new acquisition. The goal is to determine whether to jettison all the systems (and the human resources that administer them) or to keep them and either adopt or co-opt them to conform with the business practices of the new ownership. The stronger and more complete the existing solution, the greater the chances for adoption and retention.
To a large degree, the strength of the IT logistics solution at a merged or acquired company may be influencing which trucking and logistics companies represent an attractive target for purchase at the outset. The exceptional visibility and accountability afforded by best-in-class TMS tools for example, provide detailed insight into the financial and operational efficiency of the transportation and logistics programs within any given organization and this information is critical to making a truly beneficial acquisition.
While your organization may not currently be considering any acquisitions – nor may you be aware that your company is in the sights of a larger potential buyer – there is always positive value in engaging and maintaining strong logistics IT solutions.
From the perspective of the acquired organization, the relative strength of the incumbent logistics IT solution represents a modicum of job security even in the tumult that arises when their company is bought out. In some cases, the logistics IT solutions within the target company are more robust and penetrating than those of the buying company. In these cases, the transportation and operations personnel who have been administering and maintaining the TMS find themselves in the enviable position of “resident subject matter expert”. In these cases, while many redundant positions within the acquired organization are eliminated, the logistics IT personnel are retained due to the mission critical nature of their function. Of course, this does not occur when the underlying solution is not of sufficiently high quality.
The point of all this is simply that, while your organization may not currently be considering any acquisitions – nor may you be aware that your company is in the sights of a larger potential buyer – there is always positive value in engaging and maintaining strong logistics IT solutions beyond the benefits they provide in the realm of supply chain management.