Vertical Integration is an important message to any manufacturer – whether large or small one element manufacturing firms, facilities or personnel all desire is control. Particularly in the health/scientific/diagnostics industry, manufacturing of consumables is a high demand market with many competitors, however it is the trusted brands with a large slice of the pie who will always see the strategy as a device of survival and device of success.
One case study which Westlab finds insightful and inspirational is CSL Behring – now a national pride which provides us manufacturing capability of some of the world’s best medicines, including the AstraZeneca COVID-19 vaccine. Besides leading a vertical integration platform and strategy, vertical manufacturing provides a heightened sovereign capability to Australia, enabling our country to continue to lead the world in research and academia in healthcare sector.
How does it benefit?
Vertical integration does wonders to a large company in allowing consumers to have better access to products. Similar to large monopolies in the roaring 20’s in the United States – although not nearly as brutal or fierce – CSL adopts the strategy of taking a level of ownership of each stage of the supply chain – from blood collection to transport to the final product. This allows an element of control over costs. With contractual agreements in logistics, low-cost collection centres, monetary initiatives to encourage blood donation, full-scale manufacturing facilities and government support in manufacturing, this strategy allows a company to gain more of a foothold in the market to keep a competitive edge.
The ins and outs of vertical manufacturing
Along with this fashion of an extent of market control, CSL Behring’s state-of-the-art manufacturing facilities employ physical vertical strategy. Where market control is concerned, along with this is always the aim of increasing profitability and return on investment, which is where we see strategies such as this emerge. Creating vertical facilities reduces the overall footprint of the facility. Dramatically cutting the initial costs of the company and slashing land acquisition prices, this enables increased investment in manufacturing capabilities – with a difference.
Image credits – cslbehring.com
Being a new trend in Europe, where space is a commodity not as freely acquired as in such vast spaces as we possess in Australia, vertical processes allow manufacturers the opportunity to maintain their capabilities while utilising space properly. CSL has led an Australian first by adopting this LEAN principle and promoting efficiency in manufacturing. This has enabled a dramatic increase in our sovereign capabilities with reduced need for funds.
Leading the way
With CSL’s strategy of gradual market acquisition, this approach is having tangible effects on Australia’s welfare and capabilities. Now CSL is fully settled into the Australian manufacturing market, competitiveness is no longer at a premium, and Australians now can be vaccinated without the need to await international deliveries. As the fragility of the globalised supply chain has been revealed, Australia’s sovereign manufacturing capabilities are being put first in every way. Using this strategy of vertical manufacturing has allowed CSL to enhance this, without the premiums normal manufacturing initiation demands. Westlab are committed to putting local first, in order to maintain absolute quality – both of supply and of the product.