In my previous article on Wilmar, I mentioned that very few companies in Asia have a vertically integrated business model like Wilmar. So what is vertical integration and how does it lend multiple advantages to a company like Wilmar?
A vertically integrated model means that a supply chain of a company is owned by that company itself – the company owns the manufacturer, supplier, distributor, retailer, etc.
In Wilmar’s case, the company owns the:
- Oil palm plantations that produce the oil palm fruit
- Milling plants that produce crude palm oil from the fruit
- Refinery plants that refine the crude palm oil into consumable uses
- Consumer products division which distributes and retails the final products
As you can see, Wilmar owns the entire supply chain upstream to downstream. It is a huge, complex operation that not many companies in Asia have. So what are the advantages of having a …