flexible cost structure.
In volatile times you will need a flexible cost structure.
Strategy and economy in balance.
The advantages of a high degree of vertical integration are primarily in a flexible reactivity. But that is only true with overcapacities or/and high flexibility of production processes. On the other hand fixed cost are high with a high vertical integration. The investment related cost but as well the indirect functions needed result in high fixed cost. With a high degree of volatility of volumes being it induced by economic cycles or seasonal business this results in low utilisation and in consequence in low profitability.
That does not mean at all that a low vertical integration is better. It needs a good balance between make and buy. This depends on the typical volumes changes of your business, economies of scales, production technologies needed and the business strategy applied. Using the right methodology our experts will find together with you the right balance between make and buy to be flexible enough and profitable. Just talk with us.
