“Integrated operations” is a term that gets thrown around a lot in the oil and gas industry, but it can be useful whether you’re pumping oil or programming software. The term describes companies that combine two or more operations or divisions to create one cohesive unit. The idea behind this sort of business strategy is to increase efficiency and save money.

One of the best examples of integrated operations comes from Dearborn, MI, where Henry Ford set up one of the most iconic images of American business: the Ford River Rouge Complex. This site held two-dozen buildings that contained all the assembly steps for creating automobiles.

At its peak during World War II, the River Rouge Complex employed about 120,000 workers with a single aim: assemble cars.

By combining the area that handles the building of the frame with the division that handles construction of the engine, Ford was able to save money that would have been lost if the two divisions had needed to commute to contact each other. This system also allowed more harmonious collaboration between divisions.

By handling each of these operations, the company is also able to cut out the expenses that come when dealing with subcontractors who have to charge for overhead and their own fees.

In his book Operations Management, Mike Pycraft explains that the benefits of integrated operations can be far-reaching. If your company is considering integrating its operations, whether that’s in a narrow manner such as marketing efforts that collaborate closely with the manufacturing end or in a wider process span including everything from raw materials supply to the retail store, you can expect to reap some or all of these benefits:

Integrated operations increase quality. When all the divisions are close together, it is easier to identify areas that are causing problems with the product’s quality and subsequently fix those problems.

Integrated operations increases speed and, therefore, output. When all the divisions are integrated, the production and throughput of raw materials is sped up, resulting in faster delivery of more goods.

Integrated operations lower costs. By keeping divisions close together and combining operations within a division, profits that would be eaten up by supplier or subcontractor fees are freed up.

The River Rouge Complex is just one example of how integrating operations can help your company gain an upper hand on the competition. By combining divisions and grouping everyone within close proximity, you can increase collaboration and decrease inefficiencies created through remote divisions.