Backward integration
[edit] Introduction
Backward integration is a form of vertical integration which involves a company buying some or all of its raw material suppliers from the upper side, irrespective of whether this is a single business or the entire supply chain. Such an action can avoid dependency on suppliers, maintains a constant supply of material, controls costs and improves profit margins, and can increase efficiency and competitiveness.
So, for example, a developer working on a large infrastructure contract likely to take many years to complete may find it economically viable to buy a small, local brickworks to ensure a constant supply of bricks at a reasonable cost.
Backward integration is often achieved by acquisition of, or merger with, the businesses further up the supply chain. As well as gaining a competitive advantage, the process can be used to make it more difficult for new companies to enter the market.
[edit] Forward integration
The opposite of backward integration is forward integration involving acquiring or merging with companies in the lower supply chain. This means the company seeking forward integration is looking to buy the distributors of its products or the retail stores that sell them. This can give a manufacturer better control in supplying its product to consumers as well as a better position to receive first-hand product feedback.
[edit] Related articles on Designing Buildings Wiki
Featured articles and news
Specifying rendered external wall insulation for fire safety
How to interrogate the evidence provided to the specifier.
The benefits of writing articles for your organisation
How to create a profile for your organisation and publish for free.
No Falls Week. The importance of safe working at height
What to expect and what is on offer to avoid accidents.
Scottish Government action to reach net-zero targets
Retrofit expert group highlight critical actions needed.
A forward thinking, inclusive global community of members.
From engineered product life-spans, to their extension.
Circular economy in the built environment
A brief description from 2021. Where are we now?
Mental Health Awareness Week with ABS
Architects Benevolent Society programme of activity.
CLC publishes domestic retrofit competency framework
Roadmap of Skills for net zero.
May 13-19: Moving more for our mental health.
Understanding is key to conservation.
Open industry engagement survey seeks responses
Institutions and the importance of engagement.
National Retrofit Hub unveils new guide
Digital Building Logbooks and Retrofit: An Introduction.
Enhancing construction site reporting efficiency
Through digitisation and the digital revolution.