Vertical Integration

What is Vertical Integration and why should you care?
Let's start with what it means.

def. Vertical Integration: A form of business organization in which all stages of production of a good, from the acquisition of raw materials to the retailing of the final product, are controlled by one company.

An example of a vertically integrated company would be a farmer who tills the earth, plants the seed, harvests the crop, delivers it to a farmers market and sells it to the person who will consume it.

In home building it's a company like Miranda Homes. We are engineers, designers, schedulers, purchasers and craftsmen. We have the infrastructure in place that allows us build the entire home. We own all of the equipment, employ all of the people and have direct purchasing power for all of the materials needed to build your home quickly, efficiently and cost effectively.

So, why should you care?

By vertically integrating, Miranda Homes has eliminated the wasted time, chaos and cost of involving 20 or more companies to build a home. Traditionally each subcontractor sends in its own team of people whose main concern is getting their part done so they can get to the next job. If a problem comes up they typically aren't authorized to fix it. Instead they'll need to move on to another job site until the problem can be taken care of. Then they have to be rescheduled to come back. Not only that, each separate company has its own overhead in the form of office staff, tools, equipment and insurance. It's that type of wasted time and duplication of efforts that makes a home take so long to build using traditional methods.

Miranda Homes works differently. We start with our own internal engineering department. All of the planning is done before we start building. Engineering drives our purchasing and scheduling departments as well as our wall panelization shop. One crew of five creates the studs for wall panels out of coils of steel using our roll forming machines. They build the wall panels in the plant and use our own trucks to transport them to the job site. The same crew that built the walls forms and pours the foundation, sets the walls, installs siding, insulates, installs drywall, installs kitchen cabinets, paints, etc. Having all of these skills allows them to solve problems quickly and put processes in place to stop them from happening in the future. It's a model that encourages constant improvement.

We own our own crane, trucks, tools and other equipment and we stock critical building materials so that we can tightly control our schedule. Because we tightly control our schedule we need to have a supply chain and work force that we can rely on. Vertical integration allows us to do that.

Mark Mecklem - Miranda Homes