Financial Data
Updated 21 Nov 2017


How advanced supply chain segmentation can increase your profitability

Segmenting your supply chain is the solution to managing the complexity associated with innovation – allowing you to achieve both profitability and competitive advantage. 


Nicole Crampton , 16 July 2017  Share  0 comments  Print


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“In today’s dynamic business environment, where technology companies are challenged continuously with the delivery and servicing of a complex set of products — demanding customers from different segments, in hundreds of markets with unique requirements — a ‘one-size-fits-all’ supply chain falls short of meeting the expectations of shareholders and customers,” says Deb Bhattacharjee, advisory services, supply chain, Ernst & Young LLP.  

EY believes that supply chain segmentation can enable companies to instil simplicity in a complex supply chain — increasing their operational efficiency and delivering greater value to their customers.

Related: Supply chain management for business growth


KEY LEARNING

“This is what supply chain segmentation is all about: By codifying specific process goal differences, you create distinct supply chain segments, which become the virtual pathways through your supply chain that are more operationally efficient and profitable in delivering the specific outcome for which they are designed,” Bhattacharjee explains.


If you’re using an outdated supply chain segmentation approach, this could be creating an obstacle towards your future business success. Only 8% of manufacturers have reached level three out of four in supply chain segmentation maturity, with none can reach level four, according to research by the University of Warwick and JDA. 

Learn from these experts on why you should implement advanced supply chain segmentation into your manufacturing business today:

Why you should segment your manufacturing supply chain

“Segmentation is not a new practice for supply chain management, yet our study reveals that it remains relatively under-developed. Supply chain segmentation should be the lens that focuses complex signals from the market, so that organisations can configure their supply chain assets, ensuring they are consistent with business strategy and deliver maximum profitability,” says Professor Janet Godsell from the University of Warwick.

She adds that in theory, segmentation is a key business process and capability to ensure company goals are realised in the activity of operation. Only 17% of respondents had business process orientation as part of their operational design. Ultimately, she says, business processes provide a way to connect the end-to-end supply chain, create integration, enable flow and deliver customer value at the lowest supply chain cost. 

This is why you should implement advanced segmented techniques into your manufacturing business’ supply chain. 

Related: 10 supply chain trends

You can’t make progress by repeating history

Supply -chain -segmentation -history

“More organisations are driving their supply chains forward by looking in the rear-view mirror, rather than looking at the road ahead. It is not just that there’s an over reliance on historic data, it is quite possible that organisations are being driven along the wrong road altogether,” adds Hans-Georg Kaltenbrunner, vice president of manufacturing industry strategy at JDA.

Kaltenbrunner says research shows that organisations don’t have the capability to navigate their supply chain accurately. They also lack the analytics capabilities, along with a consistent end-to-end analytics approach. He explains that given the lack of maturity across this space, the first movers will quickly gain a competitive advantage.

The advantage of implementing supply chain segmentation 

By segmenting your supply chain, you can devote a full team to each segment improving customer experience, which can be a differentiator in manufacturing. Another advantage of supply chain segmentation is that it enables you to address an increasingly wide range of customer needs in the most timely, efficient and profitable manner possible for each differentiable need, according to a report by EY: Supply chain segmentation.


TRY THIS

  • You should segment your manufacturing supply chain, to ensure company goals are realised in the activity of operation.
  • Focus your supply chain on future plans instead of relying heavily on historical data.
  • Devote a full team to each of your segments to improve customer experience and differentiate yourself in the market.
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About the author


Nicole Crampton


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