Industry Context: Supply Chain Management in Consumer Goods M&A

India’s consumer goods sector, spanning fast-moving consumer goods (FMCG), direct-to-consumer (D2C) brands, packaged foods, and consumer durables, is experiencing a surge in mergers and acquisitions (M&A). This momentum is fueled by market consolidation, strategic acquisitions of D2C brands to capture digital-first consumers, and vertical integration to strengthen value chains. As of June 2025, supply chain management stands as a critical driver of post-merger value, enabling cost efficiencies, operational synergy, and competitive advantage in a rapidly evolving market.

M&A Trends and Impact on Supply Chain Management

Recent M&A trends are reshaping supply chain management in the consumer goods sector:

Recent M&A trends are fundamentally reshaping supply chain management across the consumer goods sector.

• D2C Brand Acquisitions: Legacy FMCG firms are acquiring digital-native D2C brands. Consequently, these firms must integrate agile supply chains focused on speed and personalisation with their more traditional, scaled operations.
• PLI Scheme Updates: The expansion of the Production-Linked Incentive (PLI) scheme encourages localised manufacturing. As a result, many firms are reconfiguring their production footprints and sourcing strategies to optimise incentives.
• Trade and GST Changes: Adjustments in Goods and Services Tax (GST) policies and evolving trade compliance requirements are prompting businesses to rethink cross-border logistics and warehousing structures.
• ESG Mandates: Environmental, Social, and Governance (ESG) expectations are rising. For instance, new regulations now require companies to ensure that at least 30% of suppliers meet carbon-neutral benchmarks by 2030. This trend demands supply chain transparency and sustainable logistics strategies.
• Technology Convergence: Post-merger operations increasingly require the harmonisation of technology systems. Therefore, aligning ERP, CRM, and advanced digital tools such as AI, machine learning (ML), and Internet of Things (IoT) is essential for real-time decision-making and predictive planning.

Together, these trends highlight the urgency for robust integration strategies to align supply chains swiftly and effectively.

1. Key Post-Merger Supply Chain Challenges

• M&A in the consumer goods sector introduces complex supply chain management challenges:

1. Disparate Procurement Systems: Merging firms often face incompatible procurement processes and vendor contracts, hindering vendor consolidation and synergy realisation.
2. SKU Rationalisation: Combining product portfolios requires streamlining stock-keeping units (SKUs) to eliminate overlaps and optimise inventory, preventing stock bloat.
3. Distribution Network Optimisation: Integrating warehousing, third-party logistics (3PL), and logistics technologies is essential to reduce costs and enhance delivery efficiency.
4. Technology Platform Harmonisation: Disparate ERP, transportation management systems (TMS), and supply chain management platforms create data silos, impeding decision-making.
5. Cultural Gaps: Differing operational cultures between legacy and acquired supply chain teams can lead to resistance, affecting collaboration and integration.
6. Regulatory Continuity: Compliance with Food Safety and Standards Authority of India (FSSAI), Legal Metrology, and GST regulations is critical to avoid disruptions and penalties.

Addressing these challenges demands a structured approach to supply chain management.

2. Strategic Framework for Supply Chain Management Post-Merger

A four-phase framework ensures effective supply chain management post-merger:

• Phase 1: Rapid Diagnostic

Audit procurement contracts, inventory levels, logistics flows, and technology systems alignment. Identify cost-saving opportunities and compliance gaps to establish a baseline.

• Phase 2: Integration Blueprint

Define a unified operating model and map functional synergies. For example, overlapping distribution hubs can be consolidated to eliminate redundancies and reduce overheads.

Align service-level agreements (SLAs), renegotiate vendor terms to leverage combined purchasing power, deploy shared service centers for procurement and logistics, and implement digital control towers for real-time visibility.

• Phase 4: Optimisation

Use AI/ML for dynamic demand forecasting, automate fulfillment with IoT-enabled tracking, and reduce working capital lock-ins by optimising inventory. This phase drives long-term efficiency in supply chain management.

3. Hybrid Consulting Approach: Management, Finance, Legal, and Technology

• A hybrid consulting lens combining multiple functions ensures that supply chain integration is holistic:

1. Management: Align KPIs such as on-time-in-full (OTIF) delivery to encourage cross-functional collaboration. Additionally, establish performance-linked incentives tied to integration milestones.
2. Finance: Examine capex vs. opex trade-offs in logistics consolidation. For example, relocating to fewer, larger warehouses may reduce rental costs while improving distribution efficiency.
3. Legal: Standardise vendor contracts and ensure adherence to ESG and regulatory requirements, including GST reclassification and FSSAI compliance.
4. Technology: Harmonise platforms by integrating ERPs like SAP S/4HANA and deploying blockchain for traceability. Simultaneously, leverage AI-driven analytics to optimise procurement and logistics operations.

This interdisciplinary approach ensures not only cost efficiency but also long-term agility in supply chain management.

This holistic approach ensures seamless integration and value creation.

Illustrative Example

A leading FMCG conglomerate acquired a regional packaged foods brand, revealing fragmented vendor and logistics systems. Post-merger, the firm integrated procurement via SAP S/4HANA, consolidated overlapping delivery routes, and used AI for demand forecasting. Moreover, it deployed IoT devices to track shipments and monitor cold-chain compliance. As a result, logistics costs dropped by 15%, while OTIF performance improved by 20%, exemplifying the power of strategic supply chain management post-M&A.

Conclusion

In today’s fast-paced consumer goods environment, supply chain management is central to post-merger success. By adopting a structured framework and a multidisciplinary hybrid consulting approach, CXOs can address operational complexities, achieve compliance, and unlock lasting value.

Furthermore, investing in modern technologies like AI, IoT, and blockchain not only enhances transparency and speed but also aligns supply chain operations with emerging ESG expectations.

Ultimately, strategic supply chain management transforms M&A from a transaction into a catalyst for sustained growth, resilience, and competitive advantage in India’s consumer goods sector.

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