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Do we need segmentation in supply chains?
Many companies segment their supply chain for differential treatment in service levels, distribution network, production scheduling, etc. Such a segmentation is usually done based on the products… how important is the product to company’s overall sales, its profit margin, its demand variability, need for a dedicated or common production line.
This type of segmentation is inward looking, intended to make supplies easier to manage. While it does give some benefits, it is rarely a game changer.
If we want to use our supply chain capabilities to gain the Decisive Competitive Edge, we should look at the customers and segment them based on their unique needs. Should we offer 24-hour delivery in our D2C channel? Should we offer faster delivery to certain key retailers who will value it? Should we offer same day delivery to some retailers for their emergency orders?
Developing specific supply chain capabilities for such differentiating offers will give us the Decisive Competitive Edge, which is difficult for competitors to copy.