Vertical integration in supply chains: driving forces and consequences for a manufacturers downstream integration
2012 (English)In: Supply chain management, ISSN 1359-8546, E-ISSN 1758-6852, Vol. 17, no 2, 187-201 p.Article in journal (Refereed) Published
Purpose - Strategic concentration is a key issue for manufacturing companies when designing a supply chain. As a corporate strategy and a supply chain governance strategy, vertical integration relates to organisational economics and strategic supply chain management. Numerous explanations have been created for vertical integration, and transaction cost economics (TCE) provides a theoretical basis to help understand the process. However, the current popularity of vertical integration seems inspired by something more than altering industry structure and minimising cost which are the traditionally accepted explanations for vertical integration This paper aims to explore the driving forces for vertical integration, particularly downstream integration of distribution, and the consequences of vertical integration in a manufacturer-distributor-reseller chain. less thanbrgreater than less thanbrgreater thanDesign/methodology/approach - This study adopted an exploratory case study approach to examine a Swedish-based timber manufacturer that vertically integrated a distribution centre in the UK, which made it a direct supplier to DIY retailers and builders merchants. Data were collected primarily through open-ended, face-to-face interviews. less thanbrgreater than less thanbrgreater thanFindings - The study found that the most important factors driving the manufacturers vertical integration of distribution were the demands of large retail chains and the manufacturers decisions to focus on developing its positioning strategy in the supply chain. Vertical integration has transformed the manufacturer into a supplier to large timber products resellers, offering the firm a greater potential to provide integrated solutions and, therefore, become a strategic partner to its customers. less thanbrgreater than less thanbrgreater thanOriginality/value - This empirical study examined a building material distribution channel, a subject that has rarely been studied. Study results add empirical evidence to explanations and impacts of vertical integration, especially the integration of customer interface.
Place, publisher, year, edition, pages
Emerald , 2012. Vol. 17, no 2, 187-201 p.
Vertical integration, Supply chain integration, Downstream integration, Building materials, Retailing, Merchanting, Vertical marketing, Sweden
Engineering and Technology
IdentifiersURN: urn:nbn:se:liu:diva-77344DOI: 10.1108/13598541211212915ISI: 000303091900006OAI: oai:DiVA.org:liu-77344DiVA: diva2:526309