WHAT IS VERTICAL INTEGRATION?
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WHAT IS VERTICAL INTEGRATION?
In recent times, supply chain issues have hit many industries, leading to long lead times and unsatisfied customers. One way of combatting this is through vertical integration.
Vertical integration is a strategic structure implemented by a company meaning that they own the entire supply chain for their product. This article will outline how these structures work and the key benefits they yield.
What are the Benefits of Vertical Integration?
Manufacturers focused on one stage of the production line often miss the bigger picture. This means they are less likely to innovate past immediate challenges to look for opportunities for long-term solutions.
Vertical integration leads to greater predictability because more information is available to the organization. There is a greater opportunity to access production inputs and retail channels offer real-time information not filtered by third parties. Vertical integration can also allow for distribution requirements to be adjusted, promoting specific items to certain demographics. The organization can adapt rapidly to any changes, achieving a highly effective result.
Vertical integration means that companies can reduce transaction costs throughout the supply chain. Keeping things in-house inevitably avoids mark-up, but also the large size of a supply chain can be leveraged by the company when dealing with suppliers that are not part of their company.
As more is kept in-house, vertical integration allows for increased quality assurance because more reliable scrutiny is placed on what is being produced. Quality assurance is beneficial to the company as a better product often leads to returning customers.
Vertical integration means that customers can collaborate more closely with those who can create solutions and meet demanding material development challenges. This means that production can be shaped by solving customer problems rather than just selling a product.
This also means that there can be a much quicker response to problems or innovations.
Examples of vertical integration can be found all across the Mid-Mountain product line. This principle creates flexibility and a fast response to customers. To find out more about how vertical integration benefits the Mid-Mountain Materials product line, get in touch with the team today.
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Mid-Mountain Materials, Inc is an insulation manufacturer providing heat resistant fabrics and thermal insulation that provide environmental protection, emissions control, and energy conservation.
We use a wide range of different materials for our heat-resistant fabrics to ensure we can provide a cost-effective solution for many different applications, including aerospace, robotics, and welding.
Our products can provide thermal insulation at temperatures of up to 5000oF, and can also provide protection against chemicals, molten splash, and abrasion.