We recently returned from sponsoring Logichem Europe where over 250 supply chain planning professionals discussed top industry trends. A topic of particular interest this year was supply chain segmentation.
What is supply chain segmentation? It’s a way to have your physical supply chain support multiple, virtual supply chains—each focusing on a different segment of products or markets with unique production costs, distribution costs, and customer requirements.
For example, companies can use segmentation to have their low margin products follow the most cost-effective paths through the supply chain, isolate unpredictable customers into separately forecasted groups to improve overall accuracy, or give premium service only to their highly profitable customers.
That’s good news for an industry facing extreme volatility and price pressures.
If you were to group your company’s products into different categories having similar expected customer service levels, lead times, and packaging varieties, you’d find that each group places different demands on your supply chain and represents different levels of profitability to your company. So why not treat each group differently with product and service offerings tailored to each group’s unique needs?
Supply chain segmentation allows you to do this.
Mature segmentation strategies extend across several areas of your supply chain, involving differentiated customer replenishment programs, supplier replenishment programs, inventory policies, demand policies, allocation and order promising, and Sales & Operations Planning strategies. With segmentation, you can introduce more stability in your production, leverage more economical distribution, and minimize the impact of volatility.
It’s easy to see why segmentation was a main point of focus at the Logichem conference. At Triple Point, we understand the value of segmentation to our customers, which is why our Supply Chain Optimization solution supports such strategies. Contact us to find out how you can implement a segmentation strategy for your company and begin reducing the impact of today’s volatility.