EDITOR’S NOTE: The following is a reprint of the March 25th, 2015 article The Impact Of An M&A On The Procurement Department
This morning I read a post by Roz Usheroff regarding the just announced merger between Kraft and Heinz, and how an employee can both survive and thrive when an M&A occurs.
Overall it was a great post, which provided practical insights and tips on what an employee should do when their company has either acquired or been acquired by another firm.
It also reminded me of a 2008 article I had written on the Procurement Insights blog titled Procurement considerations when dealing with a merger?
Prompted by a question I had received from one of my readers regarding the impact of an M&A on procurement, and in particular the department’s relationship with suppliers, I thought that I would share the following with you.
Network Member Question
Aside from the basics of spend analysis and eliminating redundancy, I’m curious to hear of other’s experiences in dealing with merger/acquisitions and how the cultural elements were addressed in terms of promoting the use of preferred vendors and the adoption of expense management policy.
What are some best practices to promote optimal adoption of the governing policies and procedures in the absence of spend management technology?
Paul Nilsen, Purchasing Manager – Willis North America (New York, NY)
My Response
In Part 4 of my Changing Face of Procurement Conference Series titled Winning Strategies for Vendor Engagement, I briefly discuss an M&A case reference involving organizations within the confection or candy industry. I also review the same case in the critically acclaimed series Yes Virginia! There is more to e-procurement than software (Part 2) – see the link in the Web Resources Section.
Under the heading “Candy and supply base synchronization,” I wrote the following:
How important is effective internal collaboration? Just ask a candy company in the U.S. mid-west. As the manufacturer of a number of leading brands, this organization grew dramatically in a very short period of time through a series of acquisitions. Unfortunately, an extemporal supply base was a byproduct of the transactions leaving the acquiring company with a highly suspicious, deeply segmented group of suppliers.
The biggest challenge as expressed by a senior procurement manager for the parent organization was convincing the former suppliers of the acquired companies that becoming part of the larger pool would expose them to opportunities for increased sales.
The suppliers weren’t buying the “increased opportunity” mantra and as a result, the transition process was challenging to say the least.
What is worth noting is that the degree of collaboration between the different purchasing organizations was not clearly established from the beginning. This only served to fuel rather than douse the internal division fires resulting in both a practical and operational lack of cohesiveness and coordination. The end result was a “territorial” struggle that manifested itself in a divided supply base. This is hardly the environment for a successful consolidation. (Note: my August 3rd, 2007 post titled Procurement’s expanding role and the executive of the future reviewed the results of a panel discussion hosted by CPO Agenda. This will be a worthwhile read as it demonstrates the potential repercussions of excluding supply chain personnel in the early planning stages of an organization’s M&A strategy.)
What the candy company case as well as countless other examples of failed initiatives clearly demonstrate is that effective channels of communication and collaboration between diverse stakeholders both within and external to an organization determines the likelihood of a collective “best result” outcome.
If the organization to which you are referring is found wanting in this critical area, then no amount of data or spend management technology will make a difference. If it did, then 85% of all e-procurement/supply chain initiatives would not fail.
I have also included corresponding links to related articles on the disconnect that presently exists between purchasing and finance, as well as the myth of vendor rationalization.
Web Resources:
ADDED 2025 READING:
Past M&A Hershey Case References
Amplify Snack Brands (2017, $1.6B): Without integration, Hershey risked over- or under-ordering ingredients (e.g., popcorn kernels for SkinnyPop), leading to potential waste or shortages. The lack of end-to-end connectivity delayed efforts to streamline operations across its growing portfolio.
Dot’s Pretzels (2021, $1.2B) and Pretzels, Inc. (2021): Integrating these acquisitions required balancing existing chocolate production (e.g., Reese’s) with new snack lines, forcing tough choices like SKU rationalization—reducing variety to focus on high-demand items—which risked alienating consumers seeking diverse offerings.
Multiple Snack Acquisitions (2015–2023): Pre-2008, Hershey’s focus on expanding SKUs confused consumers and retailers, a challenge that resurfaced with these acquisitions. Managing varied raw materials and production processes stretched supply chain resources, prompting later efforts like Project Next Century (2010) to simplify operations.
Weaver Popcorn Manufacturing (2023): Coordinating with external suppliers for quality, timing, and capacity added layers of vulnerability, especially during global disruptions like the pandemic, necessitating investments in resilience and flexibility.
ERP Implementation (1999): Integrating acquired brands’ systems with Hershey’s (e.g., Amplify’s into SAP S/4 by 2024) risked similar disruptions if not executed carefully, though Hershey’s recent $250M automation initiative shows a learned focus on digitization to avoid past mistakes.
Broader Context Post-M&A History
- Demand Surges and Volatility: Post-acquisition demand spikes (e.g., 11% candy sales growth in 2021 per the National Confectioners Association) outpaced Hershey’s ability to scale, exacerbated by acquisitions adding new product lines. VP Will Bonifant noted in 2023 that consumer behavior shifts and retailer agility demands intensified these pressures.
- Resilience Investments: Hershey countered these challenges with strategic moves like the $1B supply chain upgrade (2023) and the $250M Advancing Agility and Automation Initiative (2024–2026), adding capacity (e.g., 13 new lines) and modular production to handle diverse portfolios more flexibly.
Conclusion
Hershey’s M&A-driven supply chain challenges include integrating siloed operations, managing capacity amidst rapid growth, handling portfolio complexity, navigating supplier dependencies, and ensuring tech alignment. While acquisitions like Amplify and Dot’s expanded Hershey’s market, they initially strained its supply chain, prompting significant investments in visibility, automation, and resilience. By 2025, these efforts aim to turn past lessons into a competitive edge, but the journey reflects the delicate balance of growth and operational stability in M&A.
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Procurement Insights 
What does a 2015 article have to do with Hershey’s 2025 acquisition of LesserEvil for $750
Posted on April 4, 2025
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EDITOR’S NOTE: The following is a reprint of the March 25th, 2015 article The Impact Of An M&A On The Procurement Department
This morning I read a post by Roz Usheroff regarding the just announced merger between Kraft and Heinz, and how an employee can both survive and thrive when an M&A occurs.
Overall it was a great post, which provided practical insights and tips on what an employee should do when their company has either acquired or been acquired by another firm.
It also reminded me of a 2008 article I had written on the Procurement Insights blog titled Procurement considerations when dealing with a merger?
Prompted by a question I had received from one of my readers regarding the impact of an M&A on procurement, and in particular the department’s relationship with suppliers, I thought that I would share the following with you.
Network Member Question
Aside from the basics of spend analysis and eliminating redundancy, I’m curious to hear of other’s experiences in dealing with merger/acquisitions and how the cultural elements were addressed in terms of promoting the use of preferred vendors and the adoption of expense management policy.
What are some best practices to promote optimal adoption of the governing policies and procedures in the absence of spend management technology?
Paul Nilsen, Purchasing Manager – Willis North America (New York, NY)
My Response
In Part 4 of my Changing Face of Procurement Conference Series titled Winning Strategies for Vendor Engagement, I briefly discuss an M&A case reference involving organizations within the confection or candy industry. I also review the same case in the critically acclaimed series Yes Virginia! There is more to e-procurement than software (Part 2) – see the link in the Web Resources Section.
Under the heading “Candy and supply base synchronization,” I wrote the following:
How important is effective internal collaboration? Just ask a candy company in the U.S. mid-west. As the manufacturer of a number of leading brands, this organization grew dramatically in a very short period of time through a series of acquisitions. Unfortunately, an extemporal supply base was a byproduct of the transactions leaving the acquiring company with a highly suspicious, deeply segmented group of suppliers.
The biggest challenge as expressed by a senior procurement manager for the parent organization was convincing the former suppliers of the acquired companies that becoming part of the larger pool would expose them to opportunities for increased sales.
The suppliers weren’t buying the “increased opportunity” mantra and as a result, the transition process was challenging to say the least.
What is worth noting is that the degree of collaboration between the different purchasing organizations was not clearly established from the beginning. This only served to fuel rather than douse the internal division fires resulting in both a practical and operational lack of cohesiveness and coordination. The end result was a “territorial” struggle that manifested itself in a divided supply base. This is hardly the environment for a successful consolidation. (Note: my August 3rd, 2007 post titled Procurement’s expanding role and the executive of the future reviewed the results of a panel discussion hosted by CPO Agenda. This will be a worthwhile read as it demonstrates the potential repercussions of excluding supply chain personnel in the early planning stages of an organization’s M&A strategy.)
What the candy company case as well as countless other examples of failed initiatives clearly demonstrate is that effective channels of communication and collaboration between diverse stakeholders both within and external to an organization determines the likelihood of a collective “best result” outcome.
If the organization to which you are referring is found wanting in this critical area, then no amount of data or spend management technology will make a difference. If it did, then 85% of all e-procurement/supply chain initiatives would not fail.
I have also included corresponding links to related articles on the disconnect that presently exists between purchasing and finance, as well as the myth of vendor rationalization.
Web Resources:
ADDED 2025 READING:
Past M&A Hershey Case References
Amplify Snack Brands (2017, $1.6B): Without integration, Hershey risked over- or under-ordering ingredients (e.g., popcorn kernels for SkinnyPop), leading to potential waste or shortages. The lack of end-to-end connectivity delayed efforts to streamline operations across its growing portfolio.
Dot’s Pretzels (2021, $1.2B) and Pretzels, Inc. (2021): Integrating these acquisitions required balancing existing chocolate production (e.g., Reese’s) with new snack lines, forcing tough choices like SKU rationalization—reducing variety to focus on high-demand items—which risked alienating consumers seeking diverse offerings.
Multiple Snack Acquisitions (2015–2023): Pre-2008, Hershey’s focus on expanding SKUs confused consumers and retailers, a challenge that resurfaced with these acquisitions. Managing varied raw materials and production processes stretched supply chain resources, prompting later efforts like Project Next Century (2010) to simplify operations.
Weaver Popcorn Manufacturing (2023): Coordinating with external suppliers for quality, timing, and capacity added layers of vulnerability, especially during global disruptions like the pandemic, necessitating investments in resilience and flexibility.
ERP Implementation (1999): Integrating acquired brands’ systems with Hershey’s (e.g., Amplify’s into SAP S/4 by 2024) risked similar disruptions if not executed carefully, though Hershey’s recent $250M automation initiative shows a learned focus on digitization to avoid past mistakes.
Broader Context Post-M&A History
Conclusion
Hershey’s M&A-driven supply chain challenges include integrating siloed operations, managing capacity amidst rapid growth, handling portfolio complexity, navigating supplier dependencies, and ensuring tech alignment. While acquisitions like Amplify and Dot’s expanded Hershey’s market, they initially strained its supply chain, prompting significant investments in visibility, automation, and resilience. By 2025, these efforts aim to turn past lessons into a competitive edge, but the journey reflects the delicate balance of growth and operational stability in M&A.
30
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