What Does Vertically Integrated Mean?

By Kristi Waterworth – Updated Aug 17, 2025 at 8:01 PM

Key Points

Vertical integration lets companies control more supply chain steps by in-house operations.
Types include backward (acquiring production inputs) and forward (controlling distribution).
This strategy can reduce costs but may be complex and costly to implement.

Companies that manufacture or distribute products are often highly dependent on their partners for timely shipments and supplies. Sometimes, they decide to take matters into their own hands and rely on in-house operations to ensure a smooth-running supply chain.

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About the Author

Kristi Waterworth has been a contributing real estate and financial expert at The Motley Fool, covering real estate, investing, and personal finance topics, since 2020. Kristi has been interviewed by various TV media outlets and podcasts for her real estate investing expertise – from residential real estate to digital real estate and everything in between. Kristi’s journalist career spans over 25 years, and she has written about real estate investing, homeownership, and home construction specifically for the last decade. She was also previously a licensed Realtor and general building contractor before the Great Recession and housing market collapse. She holds a bachelor’s degree in American history from Columbia College in Missouri.

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