Manufacturers are constantly under pressure to reduce costs while maintaining excellent quality. To achieve these objectives, companies are strategically integrating along the supply chain. There are two types of integrated supply chain models: horizontal and vertical. Horizontal integration is the acquisition of competitors in order to expand control at a given point in the supply chain. For example, one manufacturer acquires another manufacturer for growth opportunities at the manufacturing stage of the supply chain.

Vertical integration is the acquisition of additional processes to broaden control along the supply chain. While both of these supply chain models offer benefits to manufacturers such as cost savings and growth opportunities, the focus of the remainder of this article is on vertical integration and the value of partnering with a supplier, like RIS, that offers integrated manufacturing solutions.

What is an Integrated Supplier?

Optimization of the supply chain is a challenge for every company. A company’s supply chain starts with raw material acquisition and ends when the customer receives the final product – and is comprised of all of the suppliers that participate in the sourcing, manufacturing, assembly, and distribution processes. Vertical integration occurs when a company acquires additional stages of the supply chain. For example, instead of solely manufacturing products, a company broadens its offerings to include assembly, kitting, and distribution. The key concept is that vertically integrated suppliers control more steps in the supply chain!

The Value of Integrated Manufacturing Solutions

As markets become increasingly competitive, integration becomes more of a necessity for manufacturers. By acquiring additional stages in the supply chain, companies increase control, leading to lower risks, higher efficiency, and lower costs – all of which provide a critical competitive edge! Partnering with an integrated supplier allows the lower risks and cost savings to be passed onto the customer – a win for both parties! Below are some of the areas where manufacturers and customers gain value from an integrated business model.

• Lower Costs: decreased expenses are the key benefit of integration. The cost savings comes from a variety of sources depending on how a company integrates along its supply chain, but can include lower transportation and logistics expenses as well as elimination of markup fees from suppliers or wholesalers. Additionally, integrated suppliers are no longer dependent on other vendors to dictate terms and pricing – resulting in less time spent on contract negotiations and additional cost benefits.
• Fewer Disruptions: simply put, the more stages of the supply chain that are controlled, the fewer disruptions and delays that occur. Integrated manufacturers control more of their supply chain and have less surprises – and are able to more effectively manage any problems that arise. Additionally, the supply chain process flows more smoothly for integrated manufacturers – getting products to customers more rapidly and reducing time to market.
• More Flexibility: integration allows manufacturers to be more nimble and responsive to changing market conditions and customer demands. Their distribution networks are in place to seamlessly move goods as necessary. Integration also provides an economy of scale that is not possible for non-integrated suppliers. Manufacturers are able to use their size for negotiating power and to buy in bulk – resulting in lower per unit costs.
• Improved Customer Satisfaction: by controlling their own destiny, integrated suppliers have happier customers! Instead of relying on suppliers, integrated manufacturers directly influence the customer experience throughout the supply chain. Integrated suppliers also pass cost savings on to the customer, allowing for more competitive pricing strategies and more satisfied customers. Lastly, integration allows manufacturers to even more closely track and control quality – resulting in fewer off-spec or returned products and a better overall customer experience.

RIS’ Integrated Manufacturing Solutions

RIS is an advanced contract manufacturer providing robust solutions in circuit board assembly, product assembly, kitting, supply chain management, fulfillment, distribution, and reverse logistics. We employ more than 300 people and provide services to OEM’s across the world. We operate 3 state-of-the-art manufacturing facilities within the U.S, and as your one-stop-shop we have the capabilities, capacity, quality assurance standards, and resources to provide you with support for all of your manufacturing needs.

With all of the contract manufacturing partner choices out there, we know it can be difficult to find someone that not only understands your business model but also has your best intentions in mind. RIS has proven to always be a win-win focused relationship. As your one-stop-shop, we have the capabilities, capacity, quality assurance standards, and resources to provide you with support for all of your manufacturing needs. We understand that supply chain management is difficult and very time consuming, so we urge our customers to utilize us in the fullest capacity. Our total-package solutions include:

• Extensive supply-chain network
• Dedicated Program Manager
• Flexible order fulfillment
• Scalability to meet your needs

• Purchasing and inventory management
• Warehousing and drop-shipping capabilities
• Product assembly: sub-assembly and full product

Contact us today at (507) 523-3220 to see how we can help with your manufacturing project, or click here for a quote.