Supply Chain Segmentation: Concept and Best Practice Transformation Framework

Definition for Supply Chain Segmentation Concept

Sabri and Shaikh (2010) defined Segmentation as the stratification of the channel/customer/product portfolio into groups which allows the company to have a different level of service by applying differentiated inventory, supply, and fulfillment strategies. The groups could be based on revenue, margin, variability, profitability, volume of sales, product life cycle, etc.

IT research and advisory firm Gartner describes supply chain segmentation as “Designing and operating distinctly different end-to-end value chains (from customers to suppliers) optimized by a combination of unique customer value, product attribute, manufacturing and supply capabilities, and business value considerations. In essence, supply chain segmentation is the dynamic alignment of customer channel demands and supply response capabilities optimized for net profitability across each segment.