Seamless Integration of Product Acquisitions
A specialty pharmaceutical company growth strategy includes frequent acquisitions ranging from a single product to a small company. In early 2011, their rapid and continual growth led to the tripling of their southeastern distribution center’s footprint.
However, not all product integrations are of a scale that culminates in a building expansion. Often, they are acquisitions of opportunity that must be executed with speed and precision. Such was the case with a smaller-scale acquisition of a family of prescription products in the spring of 2011 that required less than a 24-hour turnaround from receipt to shipping customer orders.
Due to the financial, legal, and regulatory hurdles that must be cleared, the exact day of the close of an acquisition may not be known until it is within hours of occurring. Upon the close of the deal, all activities to make the acquisition a reality must be in place and ready to execute. The time we would like to have is not built into the timeline because doing so would result in lost sales and profit, either by customers building inventory prior to the close, or by late or missed shipments immediately after. For that reason, the expectation is that once the deal closes, product is moved over night and shipping resumes the following business day.
Although smaller acquisitions are assumed to be quick and easy, the reality is that the same processes must be followed as is done with larger acquisitions. Items Kenco prepared in advance include:
- WMS: Ensured that system setup was complete for the new items so the first receipts were processed timely and product could be moved directly into forward pick locations. Verified the product definition was complete and accurate for problem-free receipt, handling, and order processing.
- Space: Evaluated space requirements of new products prior to arrival to provide smooth flow once product was received. Determined the proper zone and replenishment quantities in the forward pick locations to help integrate the new items into the established flow of the operation.
- Training: Identified special requirements, such as packing and labeling, prior to product arrival to help avoid surprises and delays. Having proper procedures and training in place ensured quality service from the start.
- Documentation: Involved Kenco Quality in transition to ensure Certificates of Analysis (COAs), Shipping Authorizations, and other required documentation were in place and the necessary reviews had taken place. Without this coordination, there was risk that orders could have been delayed at the time of shipment.
This pharmaceutical’s smaller-scale acquisition during 2011 was successful in large part because of the planning and coordination by Kenco with the customer in the days leading up to product transfer. As a result, initial profits associated with the purchase were maximized because no inventory build-up by the end-customer was necessary and product availability and continuity were maintained.