The need for supply chain segmentation

Supply chain segmentation is the end to end process to optimize your distribution channels to your customers to improve your service and net profitability.

It requires that you re-examine the product characteristics, rethink your service models to optimize your supply chain. This can be very complex, depending on differentiation of products and customer requirements. However, segmentation will decrease the complexity of your supply chain.

In order to achieve good segmentation, companies must make a detailed and intensive analysis of their products and customers. It requires insight into how and why customers place their orders. Analysis shows you which combinations are possible within your supply chain and on which specific point this can be realized.

Despite the need to offer different value propositions to the different customer segments, companies can realize synergies in the supply chain by using the volume across the different segments to reduce costs. This is done by taking advantage of economies of scale.

Another possibility for using volume across different segments is to emphasize the use of standard components in product design. While the corporate business can best focus on a Configure-to-Order strategy and, for example, the online segment through a Build-to-Order strategy, common sharers can still be found based on the product design.

To avoid creating beautiful products, but completely disrupting your supply chain, have processes in place that are able to predict the impact of the products and their specification on your supply chain. You achieve this by providing insight per product manager or designers / developers, to predict the impact of their new products or product changes, on the total operational costs and other supply chain influences, so that they can make more efficient designs that take this into account. .

Sales & Operations planning offers you the opportunity to integrate various production processes. A single, integrated Sales and Operations Planning (S&OP) harmonizes the different supply chain segments to match supply, demand and inventory. And on the other hand to allocate the correct production capacity to the different supply chain segments based on actual and expected demand.

The best and most important reason for segmenting your supply chain is to create customer value. If your strategy and supply chain are out of sync with your customer value proposition, customer service levels will drop and inefficiencies will increase.

Supply Chain segmentation recognizes that the different customer segments have different needs. Have a responsive strategy focused on speed, order processing, high service levels and customer satisfaction. This will help each company achieve lower inventory costs through increased responsiveness.