backward integration

Definition

Acquiring ownership of one's supply chain, usually in the hope of reducing supplier power and thus reducing input costs.

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They did backward integration and I found that to be a little bit strange, because that was not how it was normally done.

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The company decided to purchase one of their major suppliers to hopefully reduce material costs through backward integration and improve profits.

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One way to improve the logistics of you company is to use backward integration buy purchasing the supply chain from one or more of your suppliers.

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