During an acquisition the focus often falls on legalities, finances, and leadership alignment. Yet, one of the most decisive factors in pre-acquisition (if you can obtain reliable data from the company being acquired) or post-acquisition success is network optimization. Network optimization allows the acquiring company to understand how the two networks can be redesigned and harmonized. The analysis addresses not only the integration of warehouses and transportation routes but also outlines strategies to maximize value at each node, along every route, and throughout all supply chain processes.
This post explores the indispensable role of network optimization in acquisitions and how it supports both entities to achieve their highest potential as one moving forward.
What is Network Optimization During an Acquisition?
During an acquisition, network optimization means mapping the two companies’ networks and understanding how they can be merged to drive efficiencies and maximize value. This might involve optimizing delivery routes, consolidating existing infrastructure, or restructuring supply bases to build a more resilient supply chain.
Questions often considered during the analysis include:
- How does the combined network best support both piles of demand?
- Where do bottlenecks or excess costs occur?
- What configuration will drive the most cost effective and responsive network?
By addressing these questions, the network optimization study enables the organization to make informed strategic decisions that safeguard business continuity and reduce overall supply chain costs.
Why Network Optimization Matters During Acquisitions?
- Reducing Complexity and Risk
In many instances acquisitions create overlapping facilities, routes, and suppliers. Network optimization helps to visualize the entire supply chain, allowing organizations to visualize these overlaps in order to eliminate the unnecessary complexity they bring. It also pinpoints vulnerabilities, like overreliance on a single warehouse or inefficient transportation lanes and provides clear options for mitigating these vulnerabilities. The result is a more robust network that is less affected by disruptions.
- Promoting Collaborative Synergies and Operational Efficiency
One of the most powerful outcomes of network optimization is synergy realization. By identifying and executing opportunities to consolidate warehouses, streamline logistics, or centralize procurement, companies can drive down operational costs and speed up delivery times. Network modeling reveals where assets overlap, where they are best retained for resilience, and where process improvements can yield immediate returns.
- Improving Service and Customer Experience
Whether you are undertaking a network study during an acquisition or not, it allows for a more optimized network allowing for improved customer experience. In some instances, the delivery time will be improved, but in most cases the delivery will be more reliable. Recalibrating inventory placement, distribution points by customer, and transportation routes, organizations can enhance customer satisfaction. Eliminating redundancies within the network improves order tracking and decreases out-of-zone shipments, which can help improve customer trust.
- Facilitating Data-Based Decision Making
Accurate and reliable data is the foundation of any network optimization study. Typical data relied upon includes transportation mode utilization, demand, inventory, and costs. By integrating and analyzing this data, organizations can identify patterns, forecast needs, and model the impact of different network configurations before they’re implemented. This data-driven approach de-risks transformation and creates a foundation for continuous improvement.
- Enabling Scalability and Future Growth
An optimized network is a scalable one. As the business grows, enters new markets, or faces changes in demand, the network can flex and adapt. During an acquisition, this foresight is critical: optimization ensures that today’s integration is tomorrow’s competitive advantage, allowing the business to respond quickly to new opportunities and market shifts. A completed model now acts as a digital twin allowing you to update your model as you gather new data and the business evolves.
Conclusion
Network optimization is much more than a technical exercise: it is the strategic foundation for uniting two organizations into a single, high-performing business. By taking a deliberate, data-driven approach to redesigning the operational network, companies can achieve smoother integrations, lower costs, and superior customer experiences. In the ever-evolving world of acquisitions, network optimization is an essential ingredient for long-term success.
—Matt Harned, St. Onge Company
