Value chain integration – what is it?
Value chain integration is a strategy of merging stages of the supply chain (from raw materials to the end customer) through mergers, partnerships, or technologies to increase control, efficiency, and added value. It includes backward/forward vertical integration, horizontal, or balanced integration, reducing transaction costs and external risks. In the food industry, it integrates raw material producers, processors, and distributors, improving traceability and minimizing losses.
Frequently asked questions
What types of value chain integration are there?
- Backward – acquisition of raw material suppliers (e.g., cocoa plantations),
- Forward – control of distribution and retail,
- Horizontal – mergers with competitors at the same stage,
- Sustainable – ESG throughout the chain.
Benefits for the food industry
Integration enables faster response to raw material price fluctuations, better FIFO coordination, and reduction of food waste through shared IT systems and quality standards.
Example: agri-food clusters connecting local producers with distributors.
Challenges of value chain integration
Asymmetry of power between links (e.g., retailers vs. producers), high merger costs, and the need for digitization (ERP, blockchain) for full visibility.
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