Supply chain segmentation: a pathway to efficiency and strategic advantage

Global companies have thousands of suppliers and dozens, if not hundreds, of manufacturing plants and distribution centers around the world. The sheer product variety, number of business partners and distribution channels adds an order of magnitude of complexity, which is further magnified by continuous innovative product introductions and changing business models.

All of which explains the renewed and elevated interest in supply chain segmentation. Stated simply, supply chain segmentation aligns specific corporate goals with focused virtual pathways through a larger, more complex supply chain.

• Have an important subset of customers who are willing to pay more for customized products or faster-than-usual delivery? A supply chain segment can be tuned to meet that need.
• Have a high-volume, low-margin product for which lowest cost is paramount? A different segment can be tuned to that need.
• Require absolute supply chain resiliency no matter what natural disasters occur? A segment can be designed to meet that challenge, too.

In the end, segmenting a complex global supply chain to create a series of clear pathways, defined by performance metrics that align with specific goals, not only cuts through the complexity associated with achieving those goals (in essence, reducing it), but also generates better information to support corporate decision-making and increases the organization’s overall flexibility.

Segmentation achieves all this by aligning and engaging organizational resources optimally to obtain the desired results.

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