Seeley International made the strategic decision to be as ‘vertically integrated’ as it could. This means that, as far as is possible, Seeley International manufactures the majority of the components for its finished products internally, as opposed to outsourcing them from other local or international companies. For example, Seeley International manufactures many components using its own plastic injection moulding machines, as well as parts and assembly of motors, pumps and filters, giving the company control over the supply chain and generating a range of advantages.
Firstly, Seeley International can ensure the consistency and quality of the components that it uses, something that is very difficult to do when outsourcing from geographically dispersed suppliers. Ensuring product quality is a key concern for businesses that compete in high value added markets as opposed to price competition in economy markets.
“We make almost everything here in South Australia because we are focussed on producing high quality, energy-efficient and durable Australian made products. We currently make the most efficient evaporative coolers and ducted gas heaters in the world and we want it to stay that way”.
Mr Frank Seeley AM FAICD – Founder and Executive Chairman, Seeley International
Secondly, by internalising component manufacture, Seeley International can maintain consistency in price paid for components, insulating itself from global price fluctuations and the changing value of the Australian dollar. Moreover, given the huge purchasing power of its multinational competitors, vertical integration enables Seeley International to produce its own components at a competitive price whilst maintaining the highest quality.
The third advantage of vertical integration for Seeley International is that the company is more responsive to fluctuations in product demand as it can immediately produce more or less components as required, rather than negotiating with suppliers and transporting components to its manufacturing facilities; the logistics of which can be both costly and time consuming. This allows Seeley International to operate in a ‘just-in-time’ manner reducing in-process inventory and associated costs.