In over a decade of covering the enterprise application space, I’ve repeatedly lauded and advised vertical focus (i.e., someone’s proven expertise in some particular industry and market segment), but not that much vertical integration per se. My beliefs were recently confirmed by what I learned while pursuing my APICS CSCP (Certified Supply Chain Professional) title.

Namely, Module One of the APICS CSCP Learning System, entitled “Supply Chain Management Fundamentals” teaches that companies have generally pursued one of the following two types of supply chain management (SCM): either vertical or lateral (also known as horizontal) integration. Vertical (supply chain) integration refers to the practice of bringing the entire supply chain inside a single organization.

In fact, vertical integration, or the ownership of many or all the parts of a supply chain, has been around longer than the term “supply chain.” By bringing many supply chain activities in-house and putting them under centralized corporate management, vertical integration solves the problem of who will design, plan, execute, monitor, and control supply chain activities. Read the rest of this entry »