Vertical Integration
Vertical integration can reduce inventory costs dramatically. This is especially true in the oil and gas industry. The oil and gas industry uses a lot of materials and equipment for exploration and production. If they rely on outside companies to furnish those materials and equipment, they have to o deal with supply and demand issues, along with high costs. Companies can use vertical integration to make the materials and equipment they need in-house. This will cut down on their inventory costs, and it can boost profits if they decide to sell the products to other companies as well.
These tips will help you cut inventory costs. Effective supply chain management software can help you cut costs even further so your entire supply chain can be lean and mean, which means it will be much more profitable. Simply integrate your supply chain system so all trading partners can access information and then work to reduce your costs. You will be amazed by how simple the process is once everything is integrated.