CONTACT US
1500 Industrial Road
Greeneville, TN 37745
800-251-7558
Email: [email protected]
Terms and Conditions . Privacy Policy
CONTACT US
1500 Industrial Road
Greeneville, TN 37745
800-251-7558
Email: [email protected]
Terms and Conditions . Privacy Policy
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Privacy Policy
CHOOSING THE RIGHT CONTRACT MANUFACTURER VERTICAL INTEGRATION
/0 Comments/in Meco Manufacturing Blog /by Whitney WinterIt’s time for another installment in our series “End of the Week Industry Speak,” and this time we’re talking about vertical integration. There are many challenges facing manufacturing companies today.
From finding the right people to handling cost pressures and dealing with global competition, there’s always something to keep you up at night. A factor that can benefit manufacturing companies is vertical integration.
What is Vertical Integration?
When a company owns its vertically related activities (including upstream supplies and downstream buyers), this is known as a company’s vertical integration.
The more ownership a company has in various stages of the value chain, the more vertical integration it enjoys. A company’s vertical scope is crucial to its success because this has a significant impact on its position in the industry where cost, differentiation and other strategic issues are concerned.
How Does Outsourcing Play a Role?
For many years vertical integration was seen as the ideal way of doing business because of the increased coordination and risk reduction it afforded.
Then outsourcing came onto the business scene, with all its claims of enhanced flexibility and opportunities for companies to focus only on the capabilities where they function in a superior way. An outsourcing model allows small or mid-size companies to be more competitive in the market.
Outsourcing Challenges
But even though outsourcing has significant benefits, it also poses challenges and risks to a company, including the way it performs financially and its success long-term.
One main challenge of outsourcing is that it leads to loss of control. Couple this with choosing the wrong contract manufacturing company and it could spell disaster.
Choosing the Right Contract Manufacturer
So just how do you choose the right contract manufacturer? It’s important to look at the big picture. Consider key inputs including:
Geographic location Technical capabilities
Materials management capabilities Some important questions to ask are:
Is the company’s location convenient for your needs?
What are its capabilities when it comes to managing various materials and processes? What quality control functions does it have in place?
Is it a strategic fit for your organization?
What is the overall financial health of the company?
Does the contract manufacturer have the cash to invest in necessary processes to be a good partner? Is the company willing to solve problems that might arise?
The right contract manufacturer (CM) can operate as an extension of your business and this includes personnel that interact with your company across various functions. Other factors to consider are the size of a contract manufacturer, its technical expertise plus financial strength and the reputation of its brand in the industry.
Many companies have found greater success in collaborating with other firms that are vertically integrated. Benefits to Choosing a Vertically Integrated CM
There are numerous benefits to choosing a contract manufacturing company that has embraced vertical integration.
First, this is a way to ensure greater geographic proximity and thus enjoy greatly reduced transportation expenses. Another important benefit is improved supply chain coordination.
Whereas working with a variety of different companies might decreased control over inputs, a vertically integrated contract manufacturer allows for greater opportunities of differentiation with increased input controls.
For example, here at Meco we handle everything from engineering, product launch and production to welding, fabrication, painting, assembly, testing, warehousing and distribution.
It’s important that you choose the right contract manufacturing company to meet your business’ unique needs. Just educate yourself and don’t be afraid to ask questions. And if there’s anything we can help you with or explain further, please feel free to get in touch.
Meco Contract Manufacturing
/0 Comments/in Meco Manufacturing Blog /by Whitney WinterINTRODUCING END OF THE WEEK INDUSTRY SPEAK FROM MECO
/in Meco Manufacturing Blog /by Whitney WinterFor 55 years, Meco Manufacturing has answered the contract manufacturing needs of East Tennessee and the Eastern United States. Not only do we bring five decades of experience to meet your manufacturing requirements, we can handle everything from planning and production to distribution, and all points in between.
In fact, it’s all we do—all day, every day. And it’s been that way since 1959. But sometimes we get so focused on what we’re doing in our daily business, we forget that there are folks out there, possibly in our own backyard, who could benefit in some way by knowing about it.
If you aren’t familiar with Meco, we think it’s time you were. That’s why we’re embarking on a new mission to tell our story and share information that you might want to know about. We’re not trying to toot our own horn, but we’ve learned a thing or two in the past half century. And sharing that knowledge and information is what we’re going to do.
We’re going to begin by telling you about what we do and how we do it. And if there are issues that seem to keep cropping up and affecting members of the manufacturing industry, we’ll shed some light on those as well. We also want to help you avoid pain points that we’ve already experienced.
So stay tuned for more to come from Meco.
And if you’re looking for a contract manufacturing company centrally located in the Southeast with more than five decades of experience, give us a call. You can trust that your needs will be met with integrity and professionalism when you work with Meco.
We always love to hear from you. Whether you have a question about how to choose the right contract manufacturer or an idea about some great new product you’d like to share with us, we’re all ears.