Commodity prices and vertical integration

“Suddenly, it is not the customer who matters; it is the supplier. The stuff that arrives at the factory loading bay is now expensive; shortages and logistical logjams are playing havoc and the company that sells you a vital commodity is digging in its heels, refusing to renew a long-term contract without a big price increase. It is time to start thinking about vertical integration. Owning every segment of the production process from metal mine to packaging plant is an unfashionable idea, but in some industries it is coming back with a vengeance.”

A really good piece here from Carl Mortished on the increasing importance to companies of having a great degree of control over their supply chains through vertical integration. There is another feature here in Forbes magazine about the shift towards vertical integration in the steel industry, and one here about Google and vertical integration.