From 1985 to 2007, Dan Huish was the CEO of Huish Detergents, Inc. During this time, Dan Huish turned his business into the first true detergent company to tie full vertical integration into all of its manufacturing processes. This included everything from the creation of a new palm-oil based, biodegradable surfactant from in-house label and box printing and bottle and cap manufacturing, and this unique take on detergent production earned Dan Huish significant recognition for his innovative methods. So why might manufacturing businesses seek to pursue vertical integration? Dan Huish provides a few reasons below.
More control over end product. Perhaps the most attractive benefit of vertical integration, businesses who chose this model have more control over the quality of their end product. Because Dan Huish’s company did everything in-house, Huish Detergent’s eyes could be on the product from start to finish.
Lower cost. Because products do not go through multiple stages of transaction from one producer to the next, production costs can stay lower, requiring a mid-stage business to spend less on products that they would then modify. Dan Huish notes that these savings can then be passed onto the customer or client, who may be more likely to choose a lower-priced product over a competitor’s higher priced alternative.
Synchronization of supply and demand. When all aspects of a product are produced in house, there is a smaller likelihood of disruption due to lack of supply due to one component, or of oversupply of another. This synchronization of supply and demand at the production level, according to Dan Huish, leads to greater efficiency and better allocation of resources along the entire production line. Similarly, companies are under less risk of a supplier discontinuing a product, being purchased by another company, changing prices, or any other interruption of business as usual.
More control over end product. Perhaps the most attractive benefit of vertical integration, businesses who chose this model have more control over the quality of their end product. Because Dan Huish’s company did everything in-house, Huish Detergent’s eyes could be on the product from start to finish.
Lower cost. Because products do not go through multiple stages of transaction from one producer to the next, production costs can stay lower, requiring a mid-stage business to spend less on products that they would then modify. Dan Huish notes that these savings can then be passed onto the customer or client, who may be more likely to choose a lower-priced product over a competitor’s higher priced alternative.
Synchronization of supply and demand. When all aspects of a product are produced in house, there is a smaller likelihood of disruption due to lack of supply due to one component, or of oversupply of another. This synchronization of supply and demand at the production level, according to Dan Huish, leads to greater efficiency and better allocation of resources along the entire production line. Similarly, companies are under less risk of a supplier discontinuing a product, being purchased by another company, changing prices, or any other interruption of business as usual.
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