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Backward Integration for cost savings in Bakery Industry

Major bakery manufacturer in India are going for backward integration for their raw material sourcing . Parle products and Surya foods are the major companies which have followed the path of backward integration to save cost .where as Britannia and ITC have centralised procurement and get savings on economies of scale while negotiating with vendors both strategies have their own advantages and disadvantages .

Bakery plants opting for backward integration has its own
Flour mills
Sugar Plants
Packaging units
These helps manufacturer to save cost on procurement of these raw material like flour , sugar and packaging material .

Advantages of backward integration is of the pricing, quality and availability of supplies, and efficiencies gained from coordinating production of supplies with their consumption

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