In today’s manufacturing scenario, is it wiser to focus on supply-chain verticalization or rather on a strategy based on horizontal expansion? In other words: on the management of the whole supply chain (from the procurement of raw materials to the final testing of the finished product) or on a specific phase of the chain (for instance tooth generation or turning on an outsourced basis)?
Since it was first established, MICROingranaggi has implemented a vertical based integration of the supply chain, as we are convinced that supplying complete products is definitely the most sensible choice. Not because we are visionaries or similar. But because it is what the market demands.
It goes without saying that many companies work in the opposite direction, focusing on a strategy based on horizontal expansion.
Is it wrong? It’s difficult to say. Simply because there is no right or wrong answer here.
If however I have to express my personal (and professional) opinion, clearly in relation to our own sector only,
I believe that such scenarios are experiencing, and will continue to experience a certain amount of difficulty. Especially nowadays.
It is obvious that the change from managing just one activity to the management of the entire product processing cycle, is by no means easy. In fact it means having to manage a series of intermediary services, which are far from easy, and could demand the utilization of resources that no longer focus on manufacturing alone, but also all the necessary satellite activities. Hence, from the management of a decidedly more extensive and structured supply chain to a rather complex logistic management system, and so on. Resources which, therefore, should have fairly transversal skillsets.
If, however, if such intermediary activities are not implemented and managed with sufficient due diligence, there is a risk of the entire chain collapsing, and a loss of specialisation in the activity which, up until then, had been the firm’s core business.
Despite the above, after many years in the business, I can say that MICROingranaggi’s choice to manage the entire supply chain has, and continues, to pay off.
It goes without saying that it is not so straightforward. Especially when you decide to minimise the involvement of independent suppliers supporting the various manufacturing process phases, aimed at gaining greater control and decreasing the product handling phases. It is in fact a concept that first and foremost implies the acquisition of new technologies, and also the use of new designated resources. This inevitably requires investments (often of quite a significant nature) with uncertain outcomes (for instance in cases of marked drops in demands).
Moral of the story: whatever the route you decide to embark on, there is always a complicated aspect around the corner. But, in our experience, the choice of providing complete product supply chain management services is highly appreciated by our customers, for two main reasons.
First and foremost because
the trends adopted by an increasing number of manufacturing firms are based on the assembly of components, and not simply produce the parts.
And secondly because the fact of being able to count on one single enterprise, reduces the commitments and responsibilities generated by the management of the various suppliers along the chain, a complex logistic set-up and last, but by no means least, it would relieve the same from the burden of discovering in which point of the supply chain an error has occurred and which suppliers are involved.
But if the complete supply chain concept is what the market demands, why don’t all enterprises provide just that.
Is it too stressful? Or because some are rather conceited in their view that what they have always done will continue to reap benefits? Or for other reasons?
