Photo: Marufish

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 …