Abstract
Supply chain management (SCM) is an integral part of most companies and plays a major role in ensuring the efficient flow of goods, services, and information throughout the organization. As companies become increasingly globalized, SCM is becoming even more important. Strategic supplier segmentation is the process of categorizing, evaluating, and selecting suppliers based on specific criteria. This article aims to discuss the importance of strategic supplier segmentation and the various approaches that can be used. Additionally, the article provides a guide to using supplier segmentation to improve performance, reduce costs, and increase customer satisfaction.
Introduction
Supply chain management (SCM) is a critical part of any business, as it is responsible for ensuring the efficient flow of goods, services, and information throughout an organization. However, with the emergence of a more globalized business environment, managing the supply chain has become even more complicated. This has led to the rise of strategic supplier segmentation, which is the process of categorizing, evaluating, and selecting suppliers based on specific criteria. In doing so, companies can identify the suppliers that are the best fit for their business needs, while at the same time reducing risk and improving efficiency.
What Is Supplier Segmentation?
Supplier segmentation is a process used by organizations to identify and evaluate potential suppliers and select the best fit for their business needs. This process can be broken down into three distinct steps: categorization, evaluation, and selection. During the categorization step, suppliers are grouped into different types based on specific criteria. This allows companies to determine what kind of suppliers are most relevant to their operations. During the evaluation step, suppliers are analyzed on the basis of factors like quality, cost, reliability, and innovation. This allows companies to identify the suppliers that are the most competitive and cost effective. Finally, during the selection step, the suppliers that meet the criteria are chosen.
The Benefits of Supplier Segmentation
One of the major benefits of supplier segmentation is improved performance. By screening and selecting the right suppliers, companies can reduce costs, increase efficiency, and improve customer satisfaction. In addition, supplier segmentation can also help to ensure that any risks associated with the supply chain are mitigated. Furthermore, it can also allow companies to develop long-term relationships with suppliers, which can lead to a better understanding of the market and improved adaptability.
Approaches to Supplier Segmentation
There are several different approaches that can be used for supplier segmentation. The most common ones are:
1. Category-based segmentation: This approach involves grouping suppliers based on the categories of products or services they provide. This allows companies to easily identify the suppliers that are the best fit for their needs.
2. Cost-based segmentation: In this approach, suppliers are grouped based on their cost of supply. This allows companies to accurately compare different suppliers and identify the most cost-effective option.
3. Risk-based segmentation: This approach involves selecting suppliers based on the risks they present. This can help companies reduce the risk of supply chain disruption and ensure the smooth flow of goods.
4. Performance-based segmentation: In this approach, suppliers are grouped based on their performance. Companies can use this to identify the suppliers that are the most effective and reliable.
Conclusion
Supplier segmentation is a vital part of any supply chain management strategy. By categorizing, evaluating, and selecting suppliers based on specific criteria, companies can ensure that their supply chain is running as efficiently and cost-effectively as possible. Furthermore, it can help to reduce risk and improve customer satisfaction. There are several different approaches that can be used for supplier segmentation, each of which has its own advantages and disadvantages. Companies should carefully consider the various approaches and select the one that best meets their needs.
References
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