Vertically Integrated and Horizontally Integrated Textile Manufacturing
Muhammad Moazzam Malik, USA
Email: moazzammalik2011@hotmail.com
WhatsApp: +1-207-219-1819
Textiles Manufacturing
Vertically integrated textile manufacturing or horizontally integrated textile manufacturing or hybrid of both these manufacturing models are basically different business competitiveness strategies of companies to meet their target of manufacturing of different textile goods for their targeted market in right lead time, with right cost and in good acceptable quality.
Vertically Integrated Textile Manufacturing
Vertically integrated manufacturing model of textile manufacturing is basically combination of both forward and back ward integration of different process / production units of textiles, which we usually use mostly for textile apparel (T&A) / Fashion textile (F&T) but this vertical integration formula is same for all kind textile manufacturing which have all in house all production from start ( Fiber ) to end (finished product in different textile products) that may be Home textile, Denim Textile, Terry Textile, Socks knit textile and even non-woven / Medical / Technical and Institution textiles .
So, vertical integration is like one window operation for mostly big customers requirement to fulfill their all product demands from same manufacturing center or cycle, which can maintain their supply chain from their own production / process of every stage right from raw material to their required finished goods.
There are two broad divisions in this integrated textile manufacturing:
1. Farm to Finish / Fiber to finish textile products: Mostly natural fibers industry cotton /Jute/ Hemp etc. and even Wool / Silk etc., which companies are farming in their own lands / farms and then processing it from ginning, spinning, weaving / knitting, Bleaching / Dyeing / Printing / Finishing / Coating / Bonding / lamination and on ward Cutting / Stitching / labeling / garment wash and packing.
2. Polymerization / Extrusion to finish textile product:
In case of synthetic (Petrochemical) Polymerization to Extrusion / molding spinning or, wet spinning to weaving / knitting, Bleaching / Dyeing / Printing / Finishing / Coating / Bonding / lamination and own ward Cutting / Stitching / labeling / garment wash and packing.
KEY TAKEAWAYS
Vertically Integrated Textile Manufacturing
What We Like (Pros)
Reduce production costs both variable cost and fixed costs.
Increased market share and like creation of a monopoly and can create entry barrier to new business.
Better way (Automation / Connected systems) to control on bulk scale production and to increase revenue generation.
Synergistic efforts (Combined marketing efforts, technology (ERP / SAP, ETP-Plants, Recovery plants and heat / water economy plants, etc.).
Better opportunities for investment growth through reduced uncertainty and making a sustainable business growth by watching all micro and microeconomics factors of business.
Can afford better training, all kind benefits, perks of employees and more career oriented for employees’ point of view.
No middleman big vertical volume size always able to increase control over its suppliers, manufacturers, or distributors without any middleman.
Strategic independence and better bargain position with all vendors and suppliers especially for important inputs/ raw material, which are rare or highly volatile in price.
Better quality control by control on all SOPS / SOCS for material processes, crimps and tight testing quality control throughout the process of vertical set up by in-line, online and end of line production checks and quality controls.
Reduced competition by creating constrain for new and small businesses.
Create economies of scales and economies of scope.
What We Don’t Like (Cons)
High capital investment is required.
Higher prices for consumers.
Less options for consumers.
Difficult to make alignment between different department of company, which can create bottlenecks, long que time and extra down times for which continuous improvement in each process and its sinking with all post and previous processes is very important.
High level of scrutiny from government agencies.
Vertical integration is often closely associated with vertical expansion.
Ownership of all stake holders is divided and sometime decision making become very complex in such vertical set ups.
There are always higher monetary and organizational costs of switching to other suppliers or buyers.
Longer led times, Q-time due to more down times than small and medium size companies.
Tough to keep all business unit of entire vertical set up run with full capacity.
Reduced flexibility for the new, larger company.
Horizontally Integrated Textile Manufacturing When we start any project of textile manufacturing with one / two or three or even more textile manufacturing stages, and rest of production we get from other companies or outsource to make final finish product, that kind of model which integrate different companies / sources to make final product from start (fiber) to end product (finished textile product) than we refer such model of textile manufacturing as horizontally integrated textile manufacturing.
Example, like a spinning mills to produce yarn only – (One or single stage of textile manufacturing) or Weaving Mills to produce greige fabric (It is also single stage of textile manufacturing) or Vertical Dye House (It will be still single stage of textile manufacturing) or combination of Knitting and a Dye hose (It is two step textile manufacturing) or even combination of Knitting / dyeing house and cut to sew (It is a three step textile manufacturing but still falls in horizontal manufacturing).
So, horizontal integrated Textile Mills are planned by targeting the acquisition /demands created by other companies, which are full filling needs of each other to make some final textile product for local or international or export market.
Horizontally integrated textile can greatly benefit for new companies because it can grow the company in any volume of production by planning and adding more processes with integration of more processes of textile manufacturing with new company targets.
KEY TAKEAWAYS
Horizontally Integrated Textile Manufacturing
What We Like (Pros)
Less Capital Investment.
Can be expanded with back ward or forward Integration of more textile processes.
Personal ownership of all stake holders is very high.
These small local companies are often better positioned against foreign competition.
Less lead time of manufacturing and much faster in fulfillment of customers orders.
Planning, system implementation, compliance, its auditing and system controls are easily manageable.
Can go for any production by engaging outside companies to meet any new demand, trend, and lower cost.
Very good for sampling, RND, product development and higher degree of innovation.
Easy to book entire plant capacity and even capacity can be increased by engaging more production unit from outside.
Easier to align with changing trends and are considered more consumer base.
What We Don’t Like (Cons)
Quality of material and outside production is not much under control.
Material control, handling and traceability of wastage is not easy especially the manufacturing which going on in other companies.
Affordability of employees training, New technology like ERP and other management tools, Automation, ETP and recycling of waste material is not viable.
Founder & Editor of Textile Learner. He is a Textile Consultant, Blogger & Entrepreneur. He is working as a textile consultant in several local and international companies. He is also a contributor of Wikipedia.
thanks for sharing the post.