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Saturday, March 8, 2014
SUPPLY CHAIN SEGMENTATION APPROACHES
There are different approaches for supply chain
segmentation. The methodology can vary depending upon the purpose.These include—
·Cost-based.Some use cost-based.Costs (and
profits) cannot be ignored.However cost-based
analyses only do so much—and leave much unanswered.The cost approach has shortcomings in being
able to truly track costs directly to key parts of the business.Estimating, allocating and assigning costs
have flaws and do not adequately address critical topics.Costs also infer there is an underlying
conotation of dealing with problems, not opportunities.
·Value-based.This segments customers by economic value, such as total revenue which
eliminates the somewhat arbitrary assigning of costs to customers and segments
to determine profitability.Companies
can develop a hypothesis -- medium size companies are the best supply-chain customers.
The segments should be large enough to complement the strategic importance.It is not segmenting for the sake of
segmenting.You are looking for
characteristics in each segment.Where
do customers in each segment differ from the other segments with regards to
supply chain service; are there may be obvious characteristics or drivers to
analyze? Some of this can be intuitive, but not all of it.
·Needs-based. This matches well with supply chain
management.Segmenting is done on differentiated
drivers that customers have for a specific supply chain service.Customers are grouped based on a common set
of needs.Internal resources, such as
sales, can help with defining or validating the need, including any that are
unmet, of each customer.The purpose is
to match sector needs with the correct supply chain service.If the service in the sector is delivered
better than the competition, then competitive advantage can be gained.
For some companies, segmenting should not be a one-cut,
standalone view.A multi-step segmentation
may be best to give deeper insights.This is especially true when a high degree of shared needs, complexity
or uncertainty exists with the business, or when there is significant
interrelationship among the company’s segments.