In a modern and especially demanding market, every company is constantly looking for ways to strengthen its position, both between its competitors and in the public’s consciousness. One of the available competitive strategies often applied by various industries is “vertical integration” or more simply, verticalization.
Verticalization: the operation of the business in more than one level of the supply chain that enables it to manage various aspects of the production, distribution and sale of products.
Verticalization gives the competitive advantage of integrating different stages of production and distribution in order to increase sales, reduce costs and improve quality control of the product being produced. An example of vertical expansion is the Swedish furniture company IKEA, which in 2015 proceeded to purchase of 83,000 acres of forest area in Romania, with the aim of securing timber at an affordable price. While in 2013, the well-known streaming services platform NETFLIX, started the production of its own original content whereas, until then, it was limited to the distribution of films and series of other producers.
Verticalization becomes easier to understand in the case of marble supplier or other natural stone companies. A vertically integrated marble company participates in all the steps of the marble production process: it has its own quarry for the extraction of the blocks, factories for the cutting and processing of the marble slabs, marble tiles and marble mosaic, as well as its own distribution network. In other words, it has the ability to provide all marble products in every form and to any category of customer.
As a competitive strategy, verticalization presents multiple advantages that can prove beneficial for a marble & natural stone company in various ways and consequently, to any supplier or customer who chooses to work with it.
A significant advantage of this specific strategy is the better control of the supply chain, from the initial stage of the extraction and processing of the marble to the transport and distribution to the end user.
The vertical marble company has the absolute control of the privately owned quarry and the planning of the entire production process. In this way, it ensures the supply of the appropriate material in the necessary quantities and at the desired time.
It is well known that a construction company that carries out a large-scale project requires significant quantities of specific stones, in order to ensure a uniform aesthetic and quality result, while at the same time, adhering to all schedules. On the other hand, an architect or designer who implements an interior or exterior project is likely to require special & personalized processing, dimensions and technical & aesthetic specifications in order to create something innovative that will satisfy their design requirements.
Both of the above categories of customers can find the solution and safely trust a vertically integrated marble company so as to ensure the uninterrupted supply of large quantities of material or a specific raw material that meets their own individual needs. In addition, we note that intermediaries are minimized, reducing the stages that separate the material from the end user and saving a significant part of the overall time and cost.
Vertically integrated companies have better control over the entire production process and can, in this way, maintain high standards of quality control for their customers.
Marble, as a valuable and natural raw material, requires very careful management, as its quality is often associated with, aside from its technical and petrographic characteristics, its surface characteristics. It is not uncommon for different marble companies to use different quality and control standards that don’t keep up with each other, with the result that purchasing the same material from different suppliers does not ensure the same outcome. It is very important for a construction company or for an architect or designer looking for, for example, marble slabs or tiles in specific quantities, treatments, dimensions and selections, to be guaranteed of receiving exactly what they ask for!
Especially for a marble company, it is necessary to have an organized quality control system that covers all stages of the production process, maximizing the objectivity of quality control. At Stone Group International, a vertical group of marble processing companies, we include, in our capacity, state-of-the-art techniques for the purpose of guaranteeing the quality, quantity and processing of the raw material, according to the requirements of each customer.
With Geoffrey, the world’s first automatic marble tile sorter, we use Artificial Intelligence and Machine Learning techniques, reduce human errors and ensure proper control and strict categorization of specific tile types. By expanding the possibilities of Quality Control and Quality Standards, with the “What’s in the box” application, our customer will have the ability to scan the QR code of the tile packaging that interests him/her and to instantly receive information, on their mobile phone, about the material and tiles, along with high resolution photos of the products contained in that particular package. Thus, they can be sure that the order placed is the one received.
How likely is it for a marble and natural stone company to produce exactly what the customer requests, choose a specific volume of marble from the quarry, carry out any processing requested and in any dimension, or to execute the most complex and demanding task with ease and success?
It is true that complex and demanding projects can be implemented easier under the supervision of a vertically integrated natural stone company, as they have specialized departments such as sales, projects, production, Dry Lay, logistics, etc.
In addition to providing customized solutions, a feature of companies that utilize the verticalization strategy is the ability to provide comprehensive solutions that meet the specific needs of each customer and significantly enhance their purchasing experience. A sales department can, for example, advise the customer on the appropriate material, a project department can contribute to the implementation of the project with targeted proposals, the Dry Lay & Quality Control department can guarantee the quality and application of the marble tiles, a logistics department can guarantee the secure packaging and transportation, etc.
An important advantage of a vertically integrated company is its increased suitability for innovative applications, as it includes many production and distribution activities in which a desired “change” for the better can occur. Coordinated areas with a common objective, such as the marketing, logistics and manufacturing departments, can develop and integrate innovative solutions together, building an effective, single operating framework.
A typical example at Stone Group International is the cooperation between the marketing, sales, R&D, logistics and production departments that led to the design and implementation of the innovative system for automatic and objective tile sorting.
The particularity of the nature of marble as a raw material and the diversity in which we can find it, makes the need for a unified and coordinated management of the stone, from extraction and processing to packaging and final distribution to the user, even more imperative.
Especially in projects that are demanding or large-scale, the coordination of all parties involved is vital and can be successfully ensured by a vertically integrated marble company. Delays and obstacles, due to individual suppliers and intermediaries, are eliminated, while last minute changes can be easily covered through customer communication with a single company that undertakes to complete the entire process of a secured raw material supply and with guaranteed high quality results.
The vertical marble processing company, having in its hands all the stages of the production process, completely reduces or minimizes the use of intermediaries and intermediate suppliers. In this way, it not only ensures the continuous, and without delay, delivery of the product, but also has the ability to reduce the costs of purchase, sale, resale and management. As can be easily understood, cost minimization from the absence of intermediaries is then passed on to the client, who benefits directly from the benefits of the vertically integrated business.
In addition, economies of scale (i.e. the increase in production accompanied by a reduction in the final price) find a representative application in vertical companies, as they avoid logistics and management costs that come from each intermediary supplier. Considering as well, the unified strength of the sales department, the unified marketing and promotion plan and the unified market research of the vertical companies, as opposed to the non-vertical ones which are called to invest in all these activities separately, it becomes obvious that the individual cost minimizations that such a company can achieve benefit the end customer who gets a reduction in the final price of the product s/he wants.
We have to admit that there are few companies in the marble & natural stone sector that have an organized marketing department. The overall image of a company to the outside, the branding, what it communicates to the public that it is interested in, the detailed research for the needs of its customers, but also performing all the actions necessary for their satisfaction, are just some of the tasks that are planned and implemented by a marketing department.
At Stone Group International we believe that marketing is not just about us as a company, but even more, about our customers. We believe in mutual development and by creating appropriate tools that add extra value and benefit to our partnerships, we support our selected customers in all stages of the marketing of our final products. Analyzing the needs of each customer individually, we offer the possibility of support with modern marketing tools such as Virtual Reality Glasses, special product catalogs, customized special packages, samples, photographs, complete material presentation proposals, using the latest technologies, as well as support in the configuration of showrooms.
We can find together the ideal solution for your project.
