The impact of WIPRO’s acquisition of UNZA on the supply chain July 9, 2007Posted by Ramnath Rangaswamy in Business, Indian Economy, Logistics, Mergers and Acquisition.
Now that Wipro’s acquisition of Unza has been announced, work will start on the integration of Unza into Wipro. One stream of work, as part of the integration, will be to deliver the cost savings due to the synergies between Wipro and Unza.
A significant part of the synergy will be realized in the supply chains of the two companies.
The synergies will be realized in three areas; (i) Sourcing, (ii) Benchmarking and (iii) Knowledge transfer
Wipro’s and Unza’s products share many raw materials- fatty acids, alcohols, soda ash, esters- which will now be bought in larger quantities. The vendors would be consolidated and lower rates would be negotiated because of the increased quantity.
The supply chain processes and measures will be compared and benchmarked between Wipro and Unza. Manufacturing processes, manufacturing costs, inventory levels, logistics costs, availability levels will be benchmarked and the best practices adopted.
As with any benchmarking exercise, the fact that the market dynamics and environment in which Unza and Wipro operate are different should be kept in mind and factored in.
Wipro and Unza would have some special knowledge which should be retained and used.
Unza, for example, is an expert on Halal products.
Also, Unza has experience of dealing with Modern retailers like Tesco, Carrefour, Makro, Metro in the markets it operates in. With these Modern retailers planning to enter India, Wipro should leverage this knowledge, which currently rests with Unza, to drive it’s business.
To identify the synergies- sourcing, benchmarking and knowledge transfer- small teams drawn from both Wipro and Unza should be put together. The team should identify the savings, draw a plan and set a timetable to realize the savings and if possible also be responsible for the implementation. The team members would be operational managers who would do this as a project in addition to their current jobs.
If you want more details on Wipro’s acquisition of Unza, here is the link;