What are the effects of acquisitions on fulfilment services?
Business is great. According to the Barclays Corporate report, 81% of 
logistics professionals believe the logistics industry in the UK is stronger than it was at pre-recession levels, and current optimism in the sector is high. 50% of companies are looking to take on more staff, and around a quarter are planning an acquisition in the next year. Now is the time to look closely at how acquisitions will affect fulfilment services.
Fulfilment services are responsible for the receiving, packaging and shipping of goods, and most of the business caters for the e-commerce market. An acquisition will impact on all areas of a business, and have ripple effects throughout a supply chain. Merging operations such as call centres and fulfilment centres, often means warehouses are having to increasingly process multiple items. This is done to remain competitive by creating a more optimised business, while expanding current operations.
Faster and more efficient order fulfilment
Acquiring more distribution centres around the country means reduced lead times, and is often the driving force behind most acquisitions. With inventory more spread out, fulfilment services are able to deliver faster and more efficiently. Both small and large companies see this as a way of spreading their network and reaching more people.
The current market fosters the growth of large conglomerates, and 2014 saw an increase in large scale mergers. However, there’s also labour and facility costs to consider, and an acquisition can be a complicated and stressful undertaking. Acquisitions are often opportunistic reactions to gaps in the market. It’s likely an acquiring company has earned its position, and will be keen to delegate its winning business formula to new premises. An acquisition may mean improvements to a current facility. Relocation is expensive and a more popular option is to utilise current space more effectively, ultimately increasing the capacity of the warehouse. This usually means a dip in productivity as improvements are made, and the pressure for a high-speed changeover can be intimidating.
Although an acquiring company will be taking on new operations, they often strive to maintain a streamlined business model, allowing greater flexibility to adapt to customers’ needs. Acquisitions require a new business strategy that will satisfy all involved. Current operations need to be examined and re-evaluated. It’s a key part of any growth plan. The most obvious changes will probably come in implementing new procedures. These could be as simple as new tracking processes. For example, moving from just email notifications when an item is dispatched, to the customer having minute by minute tracking capabilities.
Fulfilment services are set to continue rising, and acquisitions are an important part of the industry’s evolution. More and more manufacturers are looking to connect directly with their customers through their own e-commerce outlet, bringing increased business to the industry, and more chances of acquisitions. Although change is nearly always brought about, it’s important to remember that there’s reason behind new ways of doing things. Large-scale restructuring may feel like everything is being teared up from deep roots, but acquired companies often emerge stronger than before.