Global supply chain and operations consultancy Maine Pointe has released a new paper on how private equity firms can drive growth and operational effectiveness and efficiency in their portfolio companies. The paper – “Driving Value Creation in an Uncertain World” – offers guidance on how to unlock hidden value in the supply chain.
The acquisitions market has become more competitive, with a record level of unspent private equity capital, according to the paper. Factors such as coronavirus, the US-China trade war, the US presidential election, and Brexit are factors that are challenging the industry.
“An integrated, end-to-end digital supply chain is one way PE firms are unlocking shareholder value and improving their competitiveness in this challenging environment,” said Mark McTigue, EVP of private equity, North America & Europe, Maine Pointe.
The consulting firm launched a dedicated private equity practice earlier this year to help PE firms unlock value in supply chains, from pre-acquisition due diligence to exit. The operational due diligence team helps PE clients identify risks and opportunities in the end-to-end supply chain and operations, and then create an actionable roadmap for operational improvement.
With the supply chain (procurement, logistics, and operations) accounting for 80% of a company’s cost base, there are huge opportunities for optimization, especially if advanced data analytics methods are used.
“Identifying new risks and exploiting new opportunities is a significant driver of value creation,” said Jamie Loder, VP of private equity, Europe, Maine Pointe. “We are seeing a limited supply of attractive targets and new challenges in operational execution. Unexpected challenges like the current public health emergency from the Coronavirus have already impacted the industry, as global supply chains see their supplies running low.”
According to the paper, supply chain optimization can unlock significant shareholder value in a trying environment. Transformation efforts in areas such as manufacturing footprint and supplier optionality, shipping modes, and building collaboration between stakeholders can unlock growth, the firm notes. But the critical enabler is digitalization.
Maine Pointe recommends that companies develop a clear business case, articulate a pragmatic digital roadmap, and spearhead cultural change in order to drive a successful digital implementation journey.
