What is the primary purpose of backward integration in operations management?

Backward integration primarily focuses on a company's efforts to take control of its supply chain by acquiring capabilities toward suppliers. This strategic approach allows a business to gain greater control over the flow of materials and components necessary for production. By integrating backward, companies can secure supply lines, reduce dependency on external suppliers, and potentially lower costs through direct sourcing or ownership of suppliers.

This capability can lead to enhanced bargaining power and improved quality control, as firms can establish direct oversight over the production of their inputs. Additionally, backward integration can enable companies to innovate and create efficiencies in their operations, as they can align their supply chain processes more closely with their operational strategy. Thus, the primary purpose hinges on strengthening ties with suppliers to create a more seamless and reliable production process.