How Vertical Integration Reduces Program Risk Across Forging, Machining, and Molding

A forged component may leave one supplier for heat treatment, move to another for machining, and then go somewhere else for assembly or finishing. There may be good reasons for every one of those moves, but each one adds another schedule, shipment, quality system, and company to coordinate. Vertically integrated manufacturing keeps more of those operations with one supplier, which can make some programs easier to manage.

It's not the right answer for every part. Specialized suppliers, additional capacity, and qualified second sources all have an important place in a supply chain. Consolidation makes sense when it removes unnecessary handoffs without creating new risk somewhere else.

Table of Contents

• What Happens When a Part Moves Between Suppliers?
• Why Keep More Operations Together?
• When Does It Make Sense to Consolidate?
• What to Check Before Consolidating
• How MacLean-Fogg Brings Processes Together
• Frequently Asked Questions
• Start With the Part

Key Takeaways

• Vertically integrated manufacturing means one supplier performs several successive operations on a part, such as forging, heat treatment, machining, and assembly, instead of the part moving among separate companies.
• Every move between suppliers adds packaging, freight, receiving, scheduling, and another quality system, and the processing time may be only part of the total lead time.
• Keeping related operations together can simplify quality investigations and let forging and machining decisions be made around the finished component.
• Consolidation creates concentration risk, and 74 percent of chief procurement officers in Deloitte's 2025 survey identified maintaining active alternative sources as the most effective risk-mitigation strategy.
• Before consolidating, confirm which operations are in-house, whether there is capacity at every step, who owns the tooling, and what happens if a critical operation goes down.

What Is Vertically Integrated Manufacturing?

At its broadest, vertical integration means bringing multiple stages of a supply chain under one company. For a component buyer, the more useful way to think about it is what happens to the individual part.

A forged component might be forged, heat treated, machined, and assembled within one supplier's operation instead of moving among several companies. A plastic component might move from engineering and tooling through molding, insert molding or overmolding, and automated assembly with the same supplier.

Not every operation has to be in-house for the model to work, and buyers should ask which ones are. Heat treatment, plating, coatings, and other specialized processes may be outsourced even when the primary supplier performs most of the manufacturing.

What matters is understanding the route the part will take and whether the number of companies involved is adding cost, time, or complexity that the program does not need.

What Happens When a Part Moves Between Suppliers?

The most obvious difference is transportation. A part that moves from a forge to a heat treater and then to a machine shop has to be packaged, shipped, received, and scheduled at each stop. The actual processing time may be only part of the total lead time.

There is more coordination involved too. One supplier has to finish when the next supplier has capacity. Production changes have to be communicated across company lines, and inventory may sit between operations to protect the schedule.

Quality problems can become more complicated as well. Suppose a machined dimension is out of specification, but the underlying issue began with distortion during heat treatment. The machine shop sees the dimensional problem. The heat treater understands what happened during its process. The supplier that made the original part has another set of process records. Finding the root cause may require information from all three.

Separate suppliers can and do work through problems like this. The difference is that more company boundaries are involved in the investigation.

Changes can create the same issue. AIAG's Production Part Approval Process applies to every internal and external site supplying production parts, and customer requirements add their own change triggers. One OEM's supplier PPAP manual, for example, lists a change in sub-supplier and tooling transferred to other locations among the changes that require a new submission. A longer supplier route simply means there are more operations and relationships to account for when something changes.

There is also a continuity question. Every supplier required to complete a component becomes part of the plan for keeping that component in production. Buyers need to know which suppliers and processes could stop the part if something goes wrong.

Is Your Part Crossing More Company Lines Than It Needs To?

Send the print and the current manufacturing route, and MacLean-Fogg's engineering team can review which operations could stay together.

Why Keep More Operations Together?

If forging, heat treatment, and machining can stay with the same supplier, the part does not have to be packaged, shipped, received, and scheduled at three separate companies. The supplier can plan those operations as one manufacturing route instead of coordinating a series of outside deliveries.

Quality investigations can work the same way. When more of the process is managed within one organization, the people investigating a problem have access to more of the process history without having to work across several independent companies. The documentation and approval requirements still depend on the customer and program, but the investigation itself can involve fewer organizational boundaries.

There can also be an engineering advantage when one operation affects the next.

The amount of stock left on a forging, the location of features, and how close the forging can get to the finished geometry all affect the machining that follows. If the teams responsible for both processes work together, they can make decisions based on the finished component rather than optimizing one operation without considering what happens next.

Research on vertical integration in automotive product development by Sharon Novak and Scott Stern describes a tradeoff. Outsourcing can provide access to the latest technology from specialized suppliers, while vertical integration supports adaptation and capability development over the life of a product. In their study, initial performance was lower with more vertical integration, but performance improved more over time.

That distinction is important because vertical integration is not automatically better. Its value depends on the part and what needs to be coordinated to make it.

When Does It Make Sense to Consolidate?

Complex parts that move through several related operations are a logical place to look. If a decision made during forging affects machining, or tooling decisions affect molding and assembly, there may be an advantage to having those teams working together.

Volume and capacity have to be considered at the same time. A supplier may have plenty of room on a forge or molding press but limited machining or assembly capacity downstream. Consolidating the route only works if the supplier can support the program through every required operation.

There are also good reasons to use more than one supplier.

• Specialized Capability: A specialist may have equipment, expertise, or technology the primary manufacturer does not.
• Volume: The program volume may be too large for one source to support.
• Continuity: A qualified second supplier may be important for keeping a critical program in production.

Continuity matters because consolidation creates concentration risk. The U.S. Government Accountability Office identifies mitigating risks such as reliance on foreign and single-source suppliers as essential to avoiding supply disruptions in the defense industrial base. Deloitte's 2025 Global Chief Procurement Officer Survey found that 74 percent of chief procurement officers identified maintaining active alternative sources as the most effective risk-mitigation strategy.

For some critical components, the better approach may be to keep the manufacturing route together while still qualifying an alternative source. That is different from dividing each manufacturing operation among separate suppliers.

Cost should also be considered across the entire route. Piece price is part of the equation, but so are freight between operations, packaging, inventory, inspection, and the administrative work required to coordinate several companies.

Each handoff should add something the program needs. If it doesn't, that operation is a candidate for consolidation.

What to Check Before Consolidating

Before consolidating a program, review the full manufacturing route with the supplier, operation by operation.

• Manufacturing Route: Confirm which operations the supplier performs in-house, where each one takes place, and which go to outside processors for heat treatment, plating, or coatings, along with how those processors are managed.
• Capacity at Every Step: Check whether machining and automated assembly can support the same volume as the forge or molding press, since the downstream operations matter just as much as the primary process.
• Tooling: Find out who owns each die, mold, fixture, and gauge, where it will be stored, and what happens to it if production has to move.
• Quality and Change Control: Ask which facilities hold the required certifications, how traceability works across operations, who leads corrective action when a problem crosses processes, and which changes require customer notification or approval.
• Recovery Plan: Ask what happens if a critical machine, line, or facility goes down, whether another facility can take the work, and what recovery would look like.

Comparing Suppliers for a Multi-Step Part?

Contact MacLean-Fogg about your application, and the engineering team can review which operations make sense to keep together and where an outside source still fits.

How MacLean-Fogg Brings Processes Together

MacLean-Fogg has manufacturing capabilities across hot forging, warm and cold forming, CNC and screw machining, heat treatment, thread tapping, deep drawing, automated assembly, and injection and insert molding. For customers, the value comes from where those processes can be combined around a particular component.

MacLean-Fogg's Metform facility in Savanna, Illinois, is one example. The facility has been hot forming parts since 1976 and pairs hot forging and machining with heat treatment, broaching, drilling, tapping, cold forming, coating, and assembly. For gear blanks, MacLean-Fogg offers components as forgings or in a green turned, ready-to-hob condition, with additional capabilities that include broaching and drilling.

That gives the engineering team an opportunity to look at the forging and downstream work together. If changing the forged geometry can reduce machining, the decision can be made around the finished component rather than treating forging and machining as unrelated operations.

MacLean-Fogg brings together forming and secondary processes across its manufacturing operations, including cold forming, warm forming, machining, thread rolling, tapping, heat treatment, and assembly. The exact route depends on the component and facility, so the manufacturing sequence needs to be reviewed part by part.

EPC, a MacLean-Fogg Company, applies the same approach to engineered plastics at its Wisconsin plants in Menomonee Falls and Whitewater. Its capabilities include predictive mold-flow analysis, in-house tooling, injection molding, insert molding, overmolding, and automated assembly.

Not every MacLean-Fogg process belongs in the route for every component. There will be programs where an outside specialist or an additional source makes more sense. The starting point is the finished part and what it has to do. From there, the engineering team can determine how it should be made, which operations benefit from staying together, and where outside capability or redundancy adds value.