Private Equity’s New Proving Ground: Operations and Supply Chain

This is an excerpt of the original article. It was written for the November 2013 edition of Supply Chain Management Review. The full article is available to current subscribers.

November 2013

Sales & Operations Planning is both a science and an art. Like any science, it relies on principles, rules, methodology, and specific measurable outcomes. But an S&OP implementation also calls for creative, incremental thoughts to address challenges.

Browse this issue archive.

Already a subscriber? Access full edition now.

Need Help?

Contact customer service

847-559-7581   More options

Not a subscriber? Start your magazine subscription.

Last year a single company purchased more than 50,000 Hewlett-Packard computers, buying in bulk to save millions of dollars. But the company wasn’t General Electric, Procter & Gamble, or another large, well-known multinational conglomerate. It was the Blackstone Group, a large private equity firm.1 As the New York Times reported, the computers Blackstone was buying were for use in many of its portfolio companies.

One of the surprising facts about today’s private equity (PE) industry is that it is proving to be a powerful new presence in global markets. Blackstone alone shows why: Collectively, the businesses in its portfolio would rank as the 13th largest company by revenue, ahead of JPMorgan Chase, IBM, and Procter & Gamble. Kohlberg Kravis Roberts (KKR), another leading PE firm, would be fifth on that list, with its 74 portfolio companies and $210 billion in total revenue, according to the New York Times.

The PE industry was much in the news during 2012, with the public media spotlight casting a mostly negative image—the result, primarily, of the sector’s traditional practices of “slash and burn” fast turnover dealmaking. Charges against private equity managers of mass worker layoffs, indiscriminate offshoring, financial engineering, and excessive profits helped create—at least in the eyes of the general public—confusion and uncertainty about the industry.

This complete article is available to subscribers only. Click on Log In Now at the top of this article for full access. Or, Start your PLUS+ subscription for instant access.

Not ready to subscribe, but need this article?
Buy the complete article now. Only $20.00. Instant PDF Download.
Access the complete issue of Supply Chain Management Review magazine featuring
this article including every word, chart and table exactly as it appeared in the magazine.

SC
MR