To integrate a supply chain vertically by taking direct ownership of upstream or downstream manufacturing processes. Instead of buying components from a supplier or sending parts out for finishing, a plant will add the equipment and personnel to do the work internally. This strategy reduces reliance on external vendors, controls intellectual property, and can lower long-term piece costs, though it requires significant upfront capital.
Heard on the job
We decided to verticalize the anodizing process after the third time our supplier delayed a major shipment.
Insider tip
Companies often verticalize when quality control becomes a major issue with outside vendors, taking the financial hit on equipment to guarantee consistency.