AI-Driven Supply Chain Segmentation: Navigating the New Business Landscape

Abstract

In response to the dramatic changes in the business landscape over the past few years, companies are assessing whether they have the right supply chains to support their dynamic and digital business and exploring supply chain segmentation to reduce complexity and increase profit. Today's supply chains have become increasingly complex due to globalization, outsourcing, complicated networks, logistics capacity uncertainty and volatility, and the rapid proliferation of stocking keeping units (SKUs) and product configurations. However, many companies continue to use an outdated approach to supply chain segmentation This chapter explains the concept of segmentation, its historical background, its importance for today's business, and challenges to implementation. The chapter also provides an end-to-end supply chain practical segmentation framework. Companies can utilize this to ensure a smooth and successful implementation journey leveraging digital technologies like ML and Gen AI. Several client examples will be discussed to illustrate the “fast track to success” framework.