Supply chain segmentation strategies to manage complexity we have seen that in order to understand the companys customer value there is a process of customer segmentation that requires rigorous data analysis. From the table factors influencing supply chain segmentation, we can see that this model is using only markets criteria. Supplier segmentation is the process of dividing suppliers into distinct groups. Master of science, logistics and supply chain management, pucrio, brazil, 2014. To maximize effectiveness of supply chain segmentation, it is important to. The seven steps of the supply chain segmentation journey. Most how to advice on supply chain segmentation focuses exclusively on 2. Most how to advice on supply chain segmentation focuses. Sku clustering for supply chain planning efficiency. In this paper, we will highlight three improvements that make designing and implementing a supply chain segmentation strategy easier and. Supply chain management definitions supply chain management deals with the management of materials, information, and financial flows in a network consisting of suppliers, manufacturers, distributors, and customers. While a companys physical assetsraw materials, factory resources, warehouses, distribution centers and channelsmay be the same across all.
Checklist for supply chain segmentation supply chain movement. This report attempts to help break the psychology that keeps organisations endlessly optimising a one. Supply chain segmentation is a powerful strategy to mitigate supply chain complexity. Effective supply chain segmentation can underpin the advanced manufacturing capabilities promised by trends such as big data and iot. An scm software tool can help alleviate pain points commonly experienced when manual methods are in place. Introducing supply chain segmentation procedures into. The future belongs to companies who can profitably match their supply chains to the specific needs of their customer segments. Modern supply chain management is a highly complex, multidimensional problem set with virtually endless number of variables for optimization. The goal with supply chain segmentation is to move from a onesizefitsall approach to a portfolio of supply chain execution options. In simple terms, supply chain segmentation is about grouping customers. Supply chain segmentation is an iterative process as there is a constant change in customer requirements.
Pdf the purpose of this paper is to explore the factors that influence supply chain segmentation when selling to consumers through retail chains. Wielandwallenburg, 2011 supply chain management scm is the. Pdf supply chain segmentation in the sporting goods industry. Costtoserve is the cost of all supply chain activities from taking the customer order upto delivering the order. Global supply chain benchmarking study for the tire industry executive summary global supply chain benchmarking study for the tire industry executive summary 5 despite high inventory levels and logistics costs, the industry witnesses relatively higher order cycle time. Global supply chain benchmarking study for the tire industry. Segmentation is defined by ism institute for supply management as. Companies that successfully deploy segmentation strategies will have improved customer service and sales, higher. Gartner presents findings from interviews with companies that have segmented supply responses to various customer demands. Supply chain resilience supply chain risk, sustainability and resilience of sc leaders say their sc is not. International logistics and supply chain management notes pdf. The next step in supply chain excellence, we discussed some of the fundamentals for creating a supply chain segmentation strategy.
Supply chain management is based on a customercentric approach, therefore the timely and complete communication between all the elements of the. In this chapter we introduce a more holistic and practical supply chain segmentation framework that mckinsey developed. Sku segmentation is a concept that demonstates an economic benefit behind treating and handling some products differently than others. Annette clayton, vice president, global operations and supply chain, talks to turloch mooney about the new supply chain model that has been. In commerce, supply chain management scm, the management of the flow of goods and services, 2 involves the movement and storage of raw materials, of workinprocess inventory, and of finished goods from point of origin to point of consumption.
To drive competitive advantage, you need to leverage all angles within and around your supply chain. This paper proposes a procedure for the identification of productcustomer segments and application of appropriate flexibility measures, hence allowing for proper. Mckinsey supply chain segmentation framework springerlink. The main advantage is its simplicity, easy to understand and to use. Gartner presents findings from interviews with companies that have segmented. Dells supply chain transformation gattorna alignment. The case for segmentation in the modern supply chain environment, segmentation is becoming more and more valuable. Four steps for segmenting your supply base for performance. Dealing with supply chain segmentation, the most concepts and approaches involve the adaption of production or delivery. This report attempts to help break the psychology that keeps organisations endlessly optimising a onesizefitsall supply chain architecture, and limits the adoption of segmentation as a core, repeatable business process.
Companies that successfully deploy segmentation strategies will have improved customer service and sales, higher growth and margins and a deeper multichannel penetration. Supply chain segmentation provides input to the overall company strategy and should be in accordance with this. Supply chain strategy is seldom stated explicitly, making it difficult to discuss a firm. Segmentation lets companies boost profitability by tailoring their supply chain strategy to each customer and product in their portfolio.
In our previous supply chain segmentation paper, supply chain segmentation. The strategic analysis of each supplier to determine the extent to which the supplier contributes to the core competence and. Supply chain management definitions supply chain management deals with the management of materials, information, and financial flows in a network consisting of suppliers, manufacturers. Apr 16, 2011 supply chain predictability segmentation in a similar approach as in example 2, we can segment based on demand predictability and supply predictability. A study using agent based modeling and simulation supply chain. This puts more pressure on the supply chain to leverage analytics to improve supply chain segmentation and demand translation, says gartner research in a report titled, the five things chief supply chain. Supply chain optimization through segmentation and analytics. Supply chain analysis is the study of quantitative models that characterize various economic tradeoffs in the supply chain. Application of hysteresis for stable segmentation within. This paper aims to present the results of a fieldbased case study in a fast moving consumer goods company fmcgco that sought to identify the most relevant basis for supply chain segmentation. The way jda defines supply chain segmentation is as the dynamic alignment of customer channel demands and supply response capabilities across the extended value chain. Supply chain segmentation strategies to manage complexity we have seen that in order to understand the companys customer value there is a process of customer segmentation that requires rigorous. Implement a segmented supply chain strategy for profitable. While many of these processes are still manual, more and.
Transformation framework for supply chain segmentation in digital. Examples and supply chain segmentation supply chain brief. Supply chain segmentation chainalytics supply chain segmentation service helps you define product and customer segments based on how. Supplier segmentation the tool for differentiation and. If you continue browsing the site, you agree to the use of cookies on this website. Supply chain segmentation is a key element of this holistic approach properly executed. Jul 23, 2014 supply chain segmentation is an iterative process as there is a constant change in customer requirements. Here are 10 key practices that will ensure success. Supply chain management scm has become a successful concept for the management of intercompany logistics processes in valueadded supply chains and. Understand how your supply chain organization, distribution center or manufacturing site measure against competitors to close performance gaps. In the article mentioned before, mckinsey used demand volume and demand volatility for segmentation. Mar 23, 2015 the way jda defines supply chain segmentation is as the dynamic alignment of customer channel demands and supply response capabilities across the extended value chain.
The demanddriven supply chain boston consulting group. Supply chain segmentation chainalytics supply chain segmentation service helps you define product and customer segments based on how they consume resources in the supply chain rather than traditional marketing or financial classifications. Scor is the worlds leading supply chain framework, linking business processes, performance metrics, practices and people skills into a unified structure. Sep 20, 2014 supply chain segmentation slideshare uses cookies to improve functionality and performance, and to provide you with relevant advertising.
While a companys physical assetsraw materials, factory resources, warehouses, distribution centers and channelsmay be the same across all segments, its processes and policies for predicting customer demand and positioning supply can be different from one segment to another. Output the output of this tool is a breakdown and overview of the companys supply chain. The next step in supply chain excellence, we discussed some of the fundamentals for creating a supply chain segmentation. This puts more pressure on the supply chain to leverage analytics to improve supply chain segmentation and demand translation, says gartner research in a report titled, the five things chief supply chain officers need to know about industrie 4. Global supply chain benchmarking study for the tire industry executive summary global supply chain benchmarking study for the tire industry executive summary 5 despite high inventory levels and. Supply chain segmentation supply chain design chainalytics. Hau lee stanford supply chain forum call it distribution or logistics or supply chain management. Supply chain segmentation is a key element of this holistic approach properly executed, segmentation can help you reach more customers, improve profitability and reduce unnecessary complexity across the endtoend value chain. Global supply chain analytics market size industry report. A new approach to supply chain segmentation will help to enforce. This paper proposes a procedure for the identification of productcustomersegments and application of appropriate flexibility measures, hence allowing for proper.
It involves treating products, customers, channel segments, and stores dif. Supply chain segmentation is operating distinctly different, endtoend value chains optimized to deliver bottomline value. To facilitate this, the author covers the components of an integrated segmentation policy. Growing awareness of various benefits, such as forecasting accuracy, and meaningful synthesis of business data, among others, offered by supply chain analytics solutions are driving the growth of the market. A study using agent based modeling and simulation supply chain management is a complex process requiring the coordination of numerous decisions in the attempt to balance oftenconflicting objectives such as quality, cost, and ontime delivery. Complexity and interdependence are unavoidable realities for modern supply chains, and adapting supply chain processes to meet these new realities is crucial for survival. Wielandwallenburg, 2011 supply chain management scm is the management of a network of interconnected businesses involved in the provision of product and service packages required by the end customers in a supply chain. The global supply chain analytics market size was usd 3,460.
However, in absence of the right decisionsupport tools, segmentation strategies will not yield the expected benefits. The increasing fragmentation of todays markets implies that supply chains need to handle very different products. Nevertheless, a lot of companies still work based on the onesizefitsall principle. A new approach to supply chain segmentation will help to enforce business policy from end to end, which promises to deliver greater profitability, service levels and customer loyalty. This paper presents a method to capture and express a. It clearly details the power of segmentation and offers a systematic plan for implementation in the supply chain. Supply chain predictability segmentation in a similar approach as in example 2, we can segment based on demand predictability and supply predictability. The advantage of supply chain segmentation is that it allows management to work strategically with the supply chain of the company. Pdf introducing supply chain segmentation procedures into. In the 1990s dell revolutionized both the computer industry and supply chain management with its directtoconsumer business model. Why advanced supply chain segmentation is a route to. Different products at different stages of the product lifecycle can lead to several strategies being used simultaneously.
Globalized companies are dealing with complex and compelling challenges such as economic volatility, fluctuating commodity prices, supply chain inefficiencies and increasing customer expectations. An internet enabled supply chain may have justintime delivery, precise inventory visibility, and uptotheminute distributiontracking capabilities. This paper presents a method to capture and express a firm. In an effort to reduce supply chain risk and to promote the maximum flexibility, every effort should be made to migrate spend from the key quadrant to standard.
To facilitate this, the author covers the components of an integrated segmentation policy, including the analytics elements and the measures that define segmentation success. In commerce, supply chain management scm, the management of the flow of goods and services, 2 involves the movement and storage of raw materials, of workinprocess inventory, and of finished. Complexity and interdependence are unavoidable realities for modern supply chains, and adapting supply chain. To create the most profitable supply chain total cost to serve why not put segmentation to another use. The concept describes how this can be done and explores how organisations can benefit from segmenting their supply base. The framework is based on the governing principle that segmentation should add value to the supply chain without increasing its complexity cost significantly. Output the output of this tool is a breakdown and overview of the. A supply chain segmentation strategy requires executive. Analytics driving supply chain segmentation for lenovo by. Structuring supply chains based on product segmentation. Supply chain business solutions apics for business. A methodology for the segmentation of supply chains. Supply chain segments and supply chain phenotypes volker advantage. Mar 24, 2006 modern supply chain management is a highly complex, multidimensional problem set with virtually endless number of variables for optimization.
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