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Supply Chain Segmentation

The SCOR DS (Supply Chain Operations Reference Digital Standard) defines Segmentation as the process of designing and operating distinctly different end-to-end value chains (from customers to suppliers) that are optimized through a combination of unique customer value, product attributes, product, manufacturing and supply capabilities, and commercial value considerations.

Supply chain segmentation is the dynamic alignment of the demands of different customer channels and optimized supply response capabilities for net profitability in each segment.

For a correct segmentation we need to:

  • Define products/services and customers.

  • Group products/services into segments with similar characteristics.

  • Assign differentiators to each segment.

  • Define each segment according to the assigned differentiator.

  • Determine the competitiveness strategy of each segment.

  • Define an operating model to support the competitiveness strategy.

  • Establish measurement objectives for each segment and the strategies for meeting the objectives.

  • Define the performance characteristics that will be subject to a performance comparison (benchmarking) and execute it.

Segmentation is further supported by the collection of information about the supply chain environment (customers, products, services, internal and external factors), the establishment of business rules, the design of the network and the determination of regulatory requirements. and compliance requirements that apply to the business, as well as future compliance requirements.

A good supply chain segmentation process requires the participation of a multidisciplinary team to create the necessary consensus on the segments and the supply chains created from it. The Sales, Marketing, Customer Service, Operations and Supply Chain functions (Procurement, Supply, Purchasing, Manufacturing/Production, Logistics, Transportation and Distribution), which make up the company's value chain, and the Engineering function (design of product) have at least 1 representative at the table when planning and executing the segmentation initiative/review of segments and supply chains.

When is segmentation necessary? For new companies or startups, segmentation occurs from the creation of the business model. For already established companies, the segmentation is reviewed as a consequence of the adjustments in the product portfolio and market conditions, which implies a series of activities programmed in a period of time that is defined in the business rules.

At Sigmacol, Consulting Partner of ASCM (Association for Supply Chain Management), we are ready to support this very important process to generate value and increase the competitive advantage of companies in their markets through our business transformation model. Under the principle of "Tell me and I'll forget, teach me and I'll remember, involve me and I'll learn." and the People, Processes, Performance and Technology pillars, we generate the transformation of the supply chain that your company needs.

Author: Carlos Perozo, CPIM, CSCP, CLTD


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