vertical manufacturing/integration
Meaning(s)
1. a situation where the supply chain of a company is owned by that company
Popularity
Medium
Professional
Low
Social
How to Memorize
vertical manufacturing/integration can potentially maximise profits and improve turnaround time
Analysis
Vertical integration is the situation where a company controls a supply chain from manufacturing to sales. In this situation, a company owns or controls suppliers, distributors and retail locations. Vertical integration is usually put in place in order to reduce costs and improve efficiency. Vertical manufacturing means to integrate parts of a value chain or production process in order to gain a strategic advantage. These terms are used almost exclusively in business contexts and you are unlikely to hear them in casual conversation.
Professional Examples (Advance)
- As a business strategy, vertical manufacturing can be very effective as it allows a company greater control of their supply chain while also potentially reducing transportation costs and improving turnaround time.
- Maria was not content with simply making money through the product her business produced, so she adopted a strategy of vertical integration and purchased her distributor as well. Doing so really helped her maximise profits.