Supply Chain Segmentation and Its Power

Businesses are facing severe challenges in various fields. The global economic crash along with neck to neck competition has affected businesses in a great way and they are trying to tackle the problem in various ways. There are two exactly opposite problems – looking for growth via innovation and creativity and at the same time reducing costs for the same. Usually the sales growth responsibility is endowed with the marketing team and the supply chain department is given the target of cost reduction. After thorough consultancy and research it has been seen that there is need of building business alignment. And for this, supply chain segmentation plays a pivotal role. With proper business alignment, there will be great balance between marketing, product and supply chain strategy.

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Building for Business Alignment

For understanding market opportunities, it is important to identify the competitive environment and that has to be turned into customer value plan with the help of right marketing and product strategy. Competitive advantage is said to be achieved if the supply chain can come up with a plan where the value proposition is at low cost. Successful supply chain alignment is when there is complete balance between infrastructure, supply chain strategy and the operating model.

From this it is very easy to make the correct differences between supply chain and supply chain management. The supply chain management is the operating model, while supply chain is the main infrastructure.

Maintaining Business Alignment – The Function of SC Segmentation

There is no doubt about the fact that for any successful business, there needs to be a complete balance between supply chain, marketing and product. New innovative ideas have to be implemented with reduced costs. Therefore the need of the business to unite is well understood. So, just reducing costs will affect the market adversely. Therefore it is important to choose the right supply chain strategy so that best results are obtained at reduced costs and market demands are also met with. There are many service and product requirements that need to be covered in market demands. These are mainly addressed via customer segmentation, channels and different kinds of brands. If you look for these things in supply chain, then you will not find any relevance with the same.

If there is variable and unpredictable demand, then the cost of the same is quite high. There are many products which have stable demands from the consumers. The aim of supply chain is to look for this stable demand. Once this is identified and isolated it is possible to increase or maintain the level of customer service and remove the costly factors against uncertainty. When the supply chain requires minimum management, then it is possible to concentrate on the unpredictable and truly variable things like brand extensions, promotions, new product launches and so on. Companies which have a segmented approach to the plan of supply chain have almost two to four segments. The nature of the supply chain plays an important role in deciding that.

SC Segmentation – Starting The Process

If you are planning to develop a segmented supply chain, follow these steps:

  • Mapping out detailed and complete supply chain so that the entire business is covered.
  • Identifying the scope which can be actively managed by supply chain management.
  • Targeting and identifying the primary customer base for the supply chain company.
  • Knowing and identifying the signal of customer demand which will receive a response from the supply chain along with the decoupling point.
  • Carrying out a demand profiling analysis.
  • Spotting the key segments of supply chain.
  • Development of custom practices for individual segment for each involved function.

The author of the article is Evans who is associated with Big Sky Partners Jim Balestra.