There’s no doubt that M&A has picked up the pace dramatically in 2011. Recent estimates show a 58% increase in global M&A activity in the first quarter of this year versus the same time period in 2008.

If this high rate of M&A activity continues, we may even come close to the bubble environment of 2007. Private equity companies, of course, are heavily involved in many of these deals as sellers, buyers or funders.

Other M&A deals involve strategic acquisitions by sole companies looking to expand distribution channels or enter a new product market.

M&A has certainly not been limited to specific industries this year – from Jimmy Choo shoes being sold for $800 million to luxury products group Labelux, to General Mills purchasing half of French yogurt company Yoplait for over a billion, to multi-billion dollar pharmaceutical and high-tech deals – the pace and variety of activity is something to behold.

Top 11 Priorities – Update for M&A and Pharmaceutical

In the latter part of last year, Tompkins’ experts compiled lists for the Top 11 Priorities in 2011 for Profitable Growth and made predictions about M&A in general as well as in pharmaceutical and related industries. How did we do? Not bad at all.

But we missed part of the story in M&A by undervaluing the role of ROI through supply chain due diligence. For more details, read the rest of the story on M&A for 2011.

In the pharmaceutical, medical products and biotech industries, M&A is much hotter than anticipated. Tompkins predicted that uncertainty would slow things down in these sectors in 2011. Well, we were wrong – these organizations are acquiring and investing in small, medium and large companies on a large scale. In some cases, multiple supply chain integrations are being undertaken simultaneously between pharma, bio-tech and medical productions companies.  Read more about M&A in the pharma industry in this Top 11 Priorities update.

Also, look for more mid-year analysis on Top 11 Priorities for other industries here in my blog in the coming weeks.

GoGoGo!

Jim Tompkins

More Resources

Whitepaper: Integrating Supply Chains from Business Combinations

M&A Education Center

Pharmaceutical Education Center

Guess who is most interested in your company’s environmental sustainability efforts? Your customers!

Once in a while in this blog, I like to take a look at business jargon we use all of the time and try to figure out what it really means. So in the realm of business jargon, what does “going green” mean to you?

I recently read an interesting article from IndustryWeek about companies that are “going green,” that is, making their operations more sustainable for the environment. The article reports on an increasing trend: Shareholders are looking past any so-called “greenwashing” and asking for audits in the form of Corporate Social Responsibility Reports.

Shareholders want to know exactly how the corporations and their boards are going about their environmental efforts, and how much of an impact they are really making.

Customers and shareholders will want to see concrete efforts, with clear, transparent disclosure. The jargon of “going green” won’t be enough; details of the actions being taken are now being demanded.

Read more in this article and see more details on what customers and shareholders are asking for in the sustainability area today.

Go!Go!Go!

Jim

More Resources

Sustainable Supply Chains

Photo Credit: Kevin Jack

Sometimes benchmarking and best practices gets a bad rap. I hear such things as, “We don’t have time to do this and I know where we stand anyway … Why do we need to bother gathering this data if no one uses it? … No other organization is like mine, so I don’t need to do comparisons.”

I don’t understand this mindset, so there are a few things I’d like to clarify to help change any negative perspectives.

Benchmarking is best done by comparing your metrics to other companies that are similar to yours. As the saying goes, you need an “apples to apples” comparison. Many times, a company leader knows his or her organization’s internal goals, but to maintain a competitive edge, you need to know the goals of your competition.

As for best practices, of course they are not useful if you try to use a blanket approach. What works for one industry may not work for another industry. But the more educated you become on practices of other companies within your industry, the more likely you are to get ahead of the competition.

Turning data into strategy is easy if you have a partner to guide you down the benchmarking path.

And it’s important to not only gather benchmarking data, but also to discuss it with your peers. One of the best education and peer-networking events – the annual Supply Chain Leadership Forum hosted by the Supply Chain Consortium – is geared toward sharing benchmarking highlights for the year and discussing best practices across industries.

Leaders from top companies such as Campbell’s, Ingram Micro, Kraft Foods, Limited Brands, Miller-Coors, The Coca-Cola Company and Target, who are also on the Consortium’s advisory board, join in to learn and share their perspectives.

This year the forum is being held August 29-31 at the Walt Disney WorldÒ Resort in Lake Buena Vista, Florida.

A few of the sessions planned for members include:

• Core Benchmarks – Manufacturers, Finance, Retailers and Wholesalers, Distribution
• Supply Chain Uncertainty
• Getting to Know China: It’s Not an Option
• Tax-Effective Supply Chain Management
• Sustaining a Green Strategy
• Preventing Cargo Theft
• Freight Payment Terms and Discounts
• Fuel Management
• CSA – Transportation Regulations
• Real-Time Survey: Peak Season Planning and Execution

Keynotes include:
Executive Summit - Top 11 Trends Impacting Today's Supply Chains
Disney's Supply Chain Story: Optimizing the Customer Experience
Lunch Panel Discussion: SaaS - Life in the Clouds

I’ll be there, and I hope you can join us for the event too.

Go!Go!Go!

Jim

More Resources:

Tompkins Supply Chain Consortium for Logistics Service Providers (LSPs)

Investor Warren Buffett made a well-timed $26.5 billion bet on rail shipping's revival

High-Tech Industry: Finished Goods Inventory Practices

Tompkins Supply Chain Consortium

Photo Credit: gruenemann

In the early 1970s, I was a fresh-faced, new Ph.D. with big dreams, empty pockets, a beard and little hair.

Four decades later, I’ve got a company I’m proud of, a family that I couldn’t live without, the same beard and even less hair. So much has changed for me over the past 40 years, including the world that I gratefully work in as a consultant, an engineer and a global entrepreneur.

In the 1980s, I was lecturing throughout China for the Chinese Secretary of Commerce with series of lectures on warehousing, inventory management and logistics (before it was even called supply chain). I could not have predicted or even come close to the world that we see today – the proliferation of global marketplaces and the emergence of China as a global supply chain hub.

So let’s take a brief look at what has change in the past four decades.

In 1970…

• There were roughly 3.7 billion people on earth, and China was the most populous country in the world.
• Fifty-five percent of the world’s population lived in four countries/regions: China (22%), India (15%), the area now known as the European Union (EU) (12%) and the United States (6%).
• China’s portion of global GDP was just less than 1%, while the U.S. had 26.5% and the EU was at 27%.

In 2010…

• The world’s population was around 6.8 billion.
• The same four countries/regions still had the largest population, but the number is now 49%: China (20%), India (17%), EU (7%), and U.S. (5%).
• Global GDP was three times what it was in 1970, but China’s slice of GDP was around 7%.
• The U.S. portion of global GDP remained relatively constant over the past 40 years (around 26.5%), and there has been a relative decline in the share of world output during this same period by the EU members from 36% to 27%.

Recently, the rate of change has accelerated exponentially. Just five years ago, China had only 16 companies on the Fortune Global 500 list and the U.S. had 176. In 2010, China had 46 companies on the list, and the U.S. dropped to 139.

Major changes are under way in today’s global market, as China continues to evolve into a larger competitor in the industry.  You can find more facts and trends on how China is impacting global supply chains found in Tompkins’ latest whitepaper, China is Changing Supply Chains Around the World: Facts and Trends. 

Where do you see China in 10 years? How has your company responded to global market shifts? I’d like to hear your viewpoints.

Go! Go! Go!

Jim

More Resources 

China Impacts All Global Supply Chains

Tompkins International in Asia

Technomic Asia

The China Ready Company

Caught Between the Tiger and The Dragon

I know what you’re thinking. Jim, you briefed the President? Right ….

Well folks, it’s true. And it all started with one characteristic that no entrepreneur can succeed without: being prepared.

Back when I was in college in 1969, I was the engineer from Purdue University selected to be a part of the White House Fellows Program. Once they found out I was interested in material handling, they assigned me to the U.S. Post Office, where I worked three times a week. 

At this time, the post office was transferring over to an independent agency, described by the Kappel Commission. These documents were about 18 inches high, but I figured if I was supposed to know anything about it, I had better read the whole thing.  I read it from front to back, and I even created an index for myself.

Eventually, the Postmaster General had a meeting where he provided an explanation of the Kappel Commission, which I found wasn’t entirely accurate. I showed him my notes after the meeting and ended up with an appointment in his office the next day. He was impressed by how prepared I was and even asked for a copy of my index.

The next day, I get a call from the Postmaster General himself. “Jim, it seems to me that you know more about the Kappel Commission than I thought, so will you come help me brief the President.” And that is how my preparation for a meeting that I wasn’t even involved in led me to personally briefing President Nixon.

And this rare accomplishment was achieved by going the extra mile.

My advice to budding entrepreneurs is this: Think about the next meeting. Who is going to be there? What questions are they going to ask? Why will they ask these questions? What are the objectives? What might the objections be? How do we explain the value?

Think. Think. Think. There’s no such thing as too much preparation. (Read more about the other 22 traits of a successful entrepreneur in this article that I recently wrote.)

When has being prepared led you to accomplish something great? What other qualities do you find essential to being a successful entrepreneur?

Go! Go! Go!

Jim

Photo Credit: Zena C

So now that I have your attention … In the past, some of you may have heard me talk about leadership and being a cheerleader.

A few weeks ago, this got me reminiscing about my college days at Northern Illinois University. Back then, to show my rebellion against fraternities, I started my own “ferority” – a combination of a fraternity and a sorority.

And to add to the humor of our ferority, we named ourselves Pi Alpha Sigma, which stood for “Penguins Are Sexy.” My wife – we’ve been married for 43 years now – was one of the first members. She still has her ferority hat to this day, although she doesn’t get much chance to wear it.

Anyway, I was the president of the ferority, and we had a lot of good members. We really had a good thing going.

During intramural sports, we were almost unstoppable. One year, we were about to go up against the Greeks for the intramural basketball championship. Since the Greeks weren’t very happy with us, they found a rule that said only Greek organizations could have Greek names.

We either had to change our name or forfeit.

Well, knowing that you have to stay loose in basketball, we decided to change our name to the “Keopectates.” But the dean was not having that. So, we settled on naming ourselves the Keos – and we won.

I recently told this story to a group of NC State University students in an engineering entrepreneurship class to convey a message on leadership. (Read more about how “You Might Be an Entrepreneur” in this article that I wrote.)

When I talk about “leadership,” I mean that you have to know what motivates people. You have to know how to unite folks and get everyone motivated for a common goal. You can’t just “manage” people.

When things don’t go your way, you have to know how to encourage folks; rally the team, and achieve your next success. So, you also have to be a cheerleader.

How do you define leadership? Do you have any funny stories on leadership that you would like to share? If not, just tell me about penguins or college days.

Go!Go!Go!

Jim

More Resources

You Might Be an Entrepreneur

Book: Bold Leadership for Organizational Acceleration

The Biggest Difference Between Managing and Leading: Leaders Embrace Change

 Photo Credit: Axinar

Global supply chains are feeling it. Retailers and consumers are feeling it. We see it on the supermarket shelves and in the produce aisles. We talk about it over lunch.

As commodity and oil prices continue to rise, so do food prices. A harsh winter for much of the world, coupled with uncertainty in oil-producing countries and an overall greater demand for food, has led to a recent surge in food prices. Mix this with a spoonful of dampened consumer confidence and dash of slower economic growth, and this can quickly become a very bitter dish.

So what can you do – as a supply chain leader in the food and beverage industry – to minimize this impact within your operations and on your customers?

I recently discussed this issue with a food company executive, and he had some interesting insights to share:

• Organizations are doing what they can to avoid passing on cost increases on to consumers; however, consumers are now seeing price hikes of anywhere from 3% to 12%, depending on the product.
• His organization (like others) is more closely examining their supply chain processes to find ways to offset costs, including technology enhancements and packaging changes.
• Companies are applying best practices to transportation in order to minimize fuel costs, focusing on freight management and outsourcing to LSPs.
• When feasible, some segments of the food and beverage industry (such as produce) are sourcing locally to contain rising costs.

Given the above points, it seems clear that now is the optimum time for food and beverage companies to give their supply chains a “health checkup” and find further ways to cut costs.  Passing price hikes on to consumers and shrinking package sizes are limited tactics in today’s marketplace. For long-term success, supply chain strategy is the best place to look.

Go!Go!Go!

Jim

More Resources

Food & Beverage Solutions

Top 11 for 2011, Food & Beverage

LSP Supply Chain Consortium