The Evolution of Vertical Integration: Capabilities vs. Cost-Cutting

Vertical integration is an ongoing trend as medical OEMs shrink their approved vendor lists (AVLs) to consolidate and simplify supply chains. However, the very definition of vertical integration is evolving to address modern challenges.

The medical device industry is faced with unprecedented supply chain upheaval, rapid medtech innovation, and longer FDA approval processes in addition to rising costs in material, equipment, and labor —all against the burden of decreasing timelines.

Though there’s no doubt vertical integration can help OEMs address cost pressures, the primary focus of vertical integration today is less about cost-cutting and more about capability-building, improving efficiency and quality, and accelerating time to market.

Excerpt from the article:

Vertically integrated partners add value via expertise, capacity, and quality. They don’t necessarily need to house every part of the supply chain or own every aspect of production. Rather, they need to manage it, aligning the materials, expertise, and production to bring today’s complex products to market. A vertically integrated supplier has the right product, at the right place, at the right time to support OEMs.