Our fearless field reporter, Andrea Soltysiak, is back with more insights from Aberdeen Group’s recent CPO Summit in Boston. This time she recounts the sometimes radical comments from supply management pioneer Roy Anderson on how we must adapt to the changing business landscape.

In a recent presentation at Aberdeen’s CPO Summit, Roy Anderson, vice president of global procurement, travel and publishing, MetLife mentioned that 67% of current businesses will end this decade due to new owners, bankruptcy and/or a change in their business model. To keep a business running, he cites that a sustained growth of 10% is required and cost control of 80% is a must. This makes the procurement organization extremely valuable to your company.

Last year’s post Your Company is Being Acquired. Now What?, highlights Luc Volatier, CPO at Numico’s advice for the acquirer and the acquisition target from a procurement perspective, mainly in the pre-close, post-announcement phase. In this post, we’ll feature Bob Darrah, Director, Global Supply Chain at laser technology developer Newport Corp., which acquired Spectra-Physics in 2004. Darrah provides a post-acquisition perspective and lessons learned along the way.

In an article written by Dave Hannon at Purchasing Magazine last year, Darrah states that there were a clear list of challenges and benefits that came with the acquisition. The biggest challenge was the consolidation of suppliers across various organizations in the company. Darrah tells Purchasing, “There are a lot of common suppliers in our various vendor bases and ERP systems. Rationalizing those and getting the organizations ‘acquainted’ with each other so we can leverage our synergies and spend have been our areas of focus since the acquisition.”

Prior to the acquisition, Newport purchasing was a decentralized, which made supplier consolidation difficult. But the newly acquired Spectra-Physics created a Global Sourcing team of six strategic sourcing specialists who were given the two-pronged task of identifying new global supply sources as well as rationalizing and consolidating the company’s existing supply base and commodity list, cites Purchasing Magazine. Newport took the Global Sourcing team concept and combined it with the manufacturing site procurement groups. This was met with hesitation but was gradually accepted after the benefits were seen and realized.

Next was technology integration. Spectra-Physics had been using various ERP systems at 10 different sites. Newport decided to standardize all of its sites onto one platform. The concept is to rollout a new site each quarter.

As for a current update, Darrah explains that Newport’s roadmap to implement their ERP vendor globally has progressed as planned domestically; with five of seven manufacturing sites up-and-running. Implementation is proceeding concurrently in France, Canada and Japan with global roll out completed in 2008. Newport is already seeing the benefits of a consolidated platform with respect to shared data, business warehouse reporting, common metrics and significant progress in lean manufacturing initiatives. Accounts payable has been centralized in Irvine as each site is brought online, providing greater opportunity to implement procure-to-pay initiatives. The Global Strategic Sourcing team uses the available data to drive cost reduction initiatives that have exceeded the 2007 plan and projections for 2008 look promising. “We have been able to identify and leverage existing strategic suppliers and we are undergoing offshore and outsourcing efforts to China to further optimize our supply chain and provide greater value to our customers. As for lessons learned…it’s much easier to rationalize products than cultures. Change management and leadership has been the key to the Newport/Spectra-Physics integration,” adds Darrah.