Solutions, Consulting, Services We have the people, processes, tools and experience to manage any supply chain requirement. Our inventory management system allows us to identify and keep track of customer assets throughout our network of global facilities. The Advanced Planning Team listens to customer goals, maps existing processes and uses planning and analytical tools to design a supply chain capable of meeting customer-specific requirements for reliability, responsiveness, agility and cost.
Comment Segmentation lets companies boost profitability by tailoring their supply chain strategy to each customer and product in their portfolio. Here are 10 key practices that will ensure success. In the s Dell revolutionized both the computer industry and supply chain management with its direct-to-consumer business model.
For the past several years, however, the company has been transforming its supply chain into a multichannel, segmented model, with different policies for serving consumers, corporate customers, distributors, and retailers.
Dell is one of a number of enterprises that are benefiting from supply chain segmentation, a process by which companies can create profitable one-to-one relationships between their customers and their supply chains.
Under this model, different customers associated with different channels and different products are served through different supply chain processes, policies, and operational modes.
The goal is to find the best supply chain processes and policies to serve each customer and each product at a given point in time while also maximizing Supply chain responsiveness and efficiency customer service and company profitability.
Article Figures [Figure 1] Return on assets ROA equation Enlarge this image [Figure 2] One physical supply chain, multiple virtual supply chains Enlarge this image [Figure 3] Ten keys to successful sementation Enlarge this image [Figure 5] Moving toward differentiated fulfillment Enlarge this image [Figure 6] Multi-dimensional allocation and order promising Enlarge this image [Figure 7] Example of segmented service Enlarge this image By understanding the profit profiles of their customers and products, companies can tailor a more profitable supply chain strategy to each of them and thus increase the overall profitability of their portfolios.
Many companies today, however, still use "one size fits all" supply chain processes and policies, overserving some customers and underserving others—a practice that leads to significant profitability and cash-flow leakages and potentially lost sales.
Indeed, research shows that on average, percent of a company's customer and product portfolio is unprofitable. Segmentation can also help supply chain managers address some of their biggest problems.
One example is demand variability, cited by respondents to a recent survey of chief supply chain officers as the biggest challenge driving the supply chain agenda. For a look at how one manufacturer used segmentation to reduce the impact of demand variability, see the sidebar.
Another significant challenge for supply chain managers is to simultaneously provide high levels of responsiveness and efficiency. Again, segmentation can provide a solution.
In order to maximize sales and profits, some products within a portfolio could be served through an efficient supply chain while others are served through a responsive supply chain.
For example, companies that make both basic and fashion clothing will want to deliver their basic products through an efficient supply chain and deliver their fashion products through a highly responsive supply chain. This creates one segment for standard predictable products and another for fashion unpredictable products.
Each segment will have different forecasting and stocking policies. For many companies, then, supply chain segmentation would offer significant financial benefits. This article will outline the general principles involved as well as offer 10 recommendations for achieving supply chain segmentation and its goals.
The portfolio management approach The overarching challenge faced by supply chain managers—providing excellent customer service while reducing the cost of goods sold COGS and minimizing investment in new fixed assets and inventory—can be summarized in a return-on-investment ROI equation that considers such factors as return on assets ROAreturn on invested capital ROICor economic profit EP.
Figure 1 shows the ROA version, which is commonly used as an indicator of a company's effectiveness in delivering profit against its invested assets.
Segmentation provides a means by which supply chain managers can tailor service agreements with customers to increase sales while reducing operating costs and both fixed and inventory assets.
It does this by aligning supply chain policies to the customer value proposition as well as to the value proposition for the company as a whole. Segmentation is driven by a unique value proposition offered to a given customer for a given product. The supply chain must be aligned to this value proposition with different policies, as shown in Figure 2.
This may include unique policies for one or more of the following: It will also be reflected in the supply chain network and transportation design.
This essentially means that there will be multiple, virtual supply chains running against one physical supply chain. Segmentation shows that supply chain management is evolving toward a process similar to portfolio management. Companies have a portfolio of customers and channels, a portfolio of products, and a portfolio of suppliers and supply modes.
By matching those portfolios based on the best way at a given time to reliably and profitably serve each customer, companies will see tremendous value potential. Key practices in supply chain segmentation Segmentation is not just a network strategy, or an inventory strategy, or a fulfillment or manufacturing strategy.
Rather, it is an end-to-end strategy for the supply chain that has implications for many areas, from the customer through to the supplier.
Figure 3 summarizes 10 key practices that support a successful segmentation strategy. The discussion that follows describes these practices and their importance in aligning the supply chain to the unique value propositions offered to customers.
Perform regular demand and cost-to-serve analysis The foundation of segmentation is data-driven analysis of demand dynamics and the profitability of customers and products.SUPPLY CHAIN ACCELERATED. From the warehouse to the storefront, from the desktop to the driver’s cab, achieve new levels of supply chain responsiveness, performance and profitability.
Some managers believe that there are universal definitions of good or bad supply chains. We often see companies attempt to build the most efficient supply chain, regardless of whether their market strategy is to compete on price. History. The concept of supply chain management was in effect long before the term was created in In the colonial era, international trade by ship was already making for complicated transportation issues and the need for efficiency.
Reduce supply chain impact on the environment and achieve Corporate Social Responsibility objectives. Mission. Supply-Chain Management (SCM), techniques with the aim of coordinating all parts of SC from supplying raw materials to delivering and/or resumption of products, tries to minimize total costs with respect to existing conflicts among the chain yunusemremert.com example of these conflicts is the interrelation between the sale department desiring to have higher inventory levels to fulfill.
Minimizing supply chain disruptions requires taking a best-in-class approach from the highest levels of the company.