Walmart recently opened its first beef processing plant in Kansas, which will allow the retailer to package its own cuts and distribute them directly to its stores.

Walmart doesn’t specifically use this term in its press release, but what this sounds like to me is vertical integration — a supply chain strategy that’s gotten more popular. Especially as companies figure out their tariff strategy.

Not long ago, most retailers focused on selling stuff, and left processing, manufacturing and shipping to specialized companies. Then came the pandemic and all its supply chain snarls.

Jessica Ramirez, co-founder of retail advisory firm The Consumer Collective, said companies suddenly had more interest in gaining control of the process called vertical integration.

“It gives the ability for brands to be much more agile,” she said.

Companies can quickly address emergencies and the changing demands of consumers.

“You could respond quicker to items you might need that might be flying off the shelves. You can also respond quicker to trends,” Ramirez said.

And save money. Which is always important, but extra important these days, as inflation and tariffs increase the price of goods and companies scramble to find ways to absorb the costs.

“You can control it. You can control your pricing. You can easily see it,” Ramirez added.

Vertically integrated companies know exactly what it costs to produce a yard of fabric or process a pound of ground beef. There are no middlemen, no contracts, no markups. Some companies even own container ships.

“If I own multiple brands and it’s being made in the same plant in Vietnam or Indonesia or China I can fill up an international container and come,” said Michael Wohlwend, founder of Alpine Supply Chain Solutions.

Of course, being an expert in everything is not easy. That’s why Matthew Hamory, who leads grocery and food retail at AlixPartners, said vertical integration can work for big companies.

“They’ve already shown they can manage a complex organization. They have a good talent pool,” he said. They can poach the best designers, marketers and logistics managers. 

Those big companies also have money: “If you’re gonna, say, build a manufacturing plant you have to be pretty sure you’re going to get a return for the capital you’re going to invest in that,” Hamory said.

In other words, it’s a long-term bet mostly established brands can make.