Vertical Integration

shayla

WOW Framer
To successfully scale up in business often often requires vertical integration.
Staying the same size and doing it well also benefits from vertical integration.
Controlling your supply chain from beginning to end allows for consistent results.

As framers, most of us deal with problems caused by our lack of ability to do this. Anyone ordering product from elsewhere is reliant on outside sources to maintain quality. When a supplier gets in a container of carpy moulding, they often just keep it and the results pass on to us. In recent years, frustration has increased as this lack of quality control has magnified. You choose a beautiful moulding, and when the real thing comes, it's ugly. Or you choose a frame and surprise, it's late. Then late again. Or that same great frame jumps in price, or is discontinued. Or your regional supplier closes.

This built-in vulnerability can be mitigated, but it still carries a great deal of risk. Another vulnerability comes with being a shrinking part of the design industry. When your business is a supplier's main source of revenue, they're more likely to care what you think. As more suppliers use the internet to engage with retail buyers, they often remove layers of interface. In so doing, they sacrifice/absorb the functions performed by previously intermediary businesses.

This increases our need, as those businesses, to clearly define who we are, what we do, and why it matters. To do what we can do, do it well, and still find customers.
How have you experienced the reality of dealing with this in your business?

Whether it be controlling your own supply chain/product integrity or dealing with areas of outside reliance/vulnerability.

Listening.... :popc:
 
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wpfay

Forum Support Team Angry_Badger
Staff member
Probably anethma to many small shops, but narrowing selection and buying in sufficient quantity to benefit from significant price advantages has worked for me. I still offer a lot of selection, but most of my work comes out of stocked boxed profiles.
I also have an almost complete woodworking shop (almost because, you know, tools!*) which gives me an advantage on all but one other shop in the region and we have actually worked for each other and refer work to each other. I do not mill my own moulding, but am able to do basic modifications easily and do mill custom build outs and shims from lumber I stock (typically 5/4 S3S #1 Basswood). This has enabled me to do work that other shops will pass on. Not a true vertical integration, but for most, beyond being able to better manage their costs, is all the closer they can get to that goal.
Few if any have the resources from the raw living material through the processing and milling/finishing to distribution and then retail. Peter (Prospero) probably comes closer than many by doing all his finishing in house. He still buys raw wood mouldings, and does modify them as needed. I don't know if he has his own ability to mill profiles though.
*My most recent purchase is a low speed bench grinder that still has not found a home in the workshop.
 

wvframer

Forum Support Team
Staff member
At least once a month I deal with a supply problem from chop orders. I do work hard to avoid chops, but it is the only way to offer enough variety to satisfy my customers.

As I have watched the supply problems become more common, I have gradually added more inventory than I would have thought prudent even 5 years ago. I do it carefully, rarely paying even full box price for the mouldings I buy. And many profiles I am buying by the bundle at deep discounts.

The cost of this inventory is now just a cost of doing business. Ninety-five percent of my sales are from mouldings I stock now. It has turned out to be almost a wash. I make enough more on moulding I stock to compensate for the additional expense of carrying it. I know it will have no value at the end of the line.

I also state that I don't have chops in stock at the time of the order and often call them "special order items" that might take additional time if the distributor has ever disappointed me before. If the order is time-sensitive I attempt to get a second choice on record as a back-up.

If I or my business were younger I might be handling this problem differently.
 
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