This weekend The Economist published a piece entitled Moving on up where they (partially at least) championed a return to Henry Fords vertically integrated supply chain model. Concluding, they offer, that though there are risks involved (in either approach), “Recalling the days when Henry Ford ruled, vertical integration—in adapted form at least—may emerge from disgrace as an innovative solution in an era when innovation is sorely required.”
One company that recently has started to revisit a more vertically integrated supply chain is Sandvik – one of Sweden’s leading high technology groups, represented in 130 countries world wide with market leadership in stainless and high-alloy steels and special metals. In mid-February Sandvik acquired Wolfram Bergbau- und Hütten-GmbH Nfg. KG (WBH), an Austrian producer and supplier of tungsten products. In the press release that announced the acquisition Anders Thelin, President of Sandvik Tooling is quoted saying:
“It [WBH] provides us with resources to manage the entire production process, from ore to finished cemented carbide powder. In this way we will be able to further strengthen our raw material supply and develop our business and customer offering.”
Given the volatility of the current commodity markets, carefully choosing your supply chain integration strategies is becoming more and more important.
