Transformation Framework for Supply Chain Segmentation in Digital Business

Transformation Framework for Supply Chain Segmentation in Digital Business

Ehap Sabri (KPMG LLP, USA & University of Texas at Dallas, USA)
DOI: 10.4018/978-1-5225-7700-3.ch004

Abstract

The purpose of this chapter is to explore the factors that influence digital supply chain segmentation and provide a best practice transformation approach to ensure a successful journey. The initial research is based on a review of supply chain segmentation literature and the application of relevant transformation steps to specific case studies, comprising of companies from different industries. Digital supply chain segmentation strategy presents huge opportunities that are being tapped by very few companies who achieved significant benefits and gained competitive advantage. The chapter provides a practical and proven digital supply chain segmentation framework for companies who are about to take the segmentation transformation journey.
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Background

Definition for Supply Chain Segmentation Concept

Sabri (2015) defined Supply Chain segmentation as managing profitably different virtual end-to-end supply chains defined by a combination of channel/customer requirements, product characteristics, business value considerations, and differentiated supply response strategies.IT research and advisory firm Gartner (http://www.gartner.com/it-glossary/supply-chain-segmentation) 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”.

Key Terms in this Chapter

Supply Chain Segmentation: Is managing profitably different virtual end-to-end supply chains defined by a combination of channel/customer requirements, product characteristics, business value considerations, and differentiated supply response strategies.

Transformation: Is the journey of taking an organization in a new direction and reaching an entirely different level of effectiveness. It is a change to processes, systems, structure, and culture.

End-to-End Supply Chain: The philosophy of considering all value-added processes from supplier to customer and embracing the concept of eliminating middle steps and barriers to optimize the performance of supply chain.

Governance: Encompasses the establishment of organizational structure, metrics, policies, and monitoring of their effectiveness.

Clustering: The process of associating and grouping very similar (but not identical) profiles that reveals patterns, trends, requirements, characteristics, relationships, and structures.

Profiling: The process of learning information about behavior patterns, business characteristics, trends, requirements, relationships, and structures.

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