• Advertise
  • Contact Us
  • About Us
  • Supplier Directory
  • Login
  • Subscribe
  • Logout
  • My Profile

  • CORONAVIRUS
  • LOGISTICS
    • Air Cargo
    • All Logistics
    • Express/Small Shipments
    • Facility Location Planning
    • Freight Forwarding/Customs Brokerage
    • Global Gateways
    • Global Logistics
    • Last Mile Delivery
    • Logistics Outsourcing
    • LTL/Truckload Services
    • Ocean Transportation
    • Rail & Intermodal
    • Reverse Logistics
    • Service Parts Management
    • Transportation & Distribution
  • TECHNOLOGY
    • All Technology
    • Artificial Intelligence
    • Cloud & On-Demand Systems
    • Data Management (Big Data/IoT/Blockchain)
    • ERP & Enterprise Systems
    • Forecasting & Demand Planning
    • Global Trade Management
    • Inventory Planning/ Optimization
    • Product Lifecycle Management
    • Sales & Operations Planning
    • SC Finance & Revenue Management
    • SC Planning & Optimization
    • Sourcing/Procurement/SRM
    • Supply Chain Visibility
    • Transportation Management
  • GENERAL SCM
    • Business Strategy Alignment
    • Education & Professional Development
    • Global Supply Chain Management
    • Global Trade & Economics
    • HR & Labor Management
    • Quality & Metrics
    • Regulation & Compliance
    • SC Security & Risk Mgmt
    • Sustainability & Corporate Social Responsibility
  • WAREHOUSING
    • All Warehouse Services
    • Conveyors & Sortation
    • Lift Trucks & AGVs
    • Order Fulfillment
    • Packaging
    • RFID, Barcode, Mobility & Voice
    • Robotics
    • Warehouse Management Systems
  • INDUSTRIES
    • Aerospace & Defense
    • Apparel
    • Automotive
    • Chemicals & Energy
    • Consumer Packaged Goods
    • E-Commerce/Omni-Channel
    • Food & Beverage
    • Healthcare
    • High-Tech/Electronics
    • Industrial Manufacturing
    • Pharmaceutical/Biotech
    • Retail
  • REGIONS
    • Asia Pacific
    • Canada
    • China
    • Europe
    • Latin America
    • Middle East/Africa
    • North America
  • THINK TANK
  • PODCASTS
  • VIDEOS
  • WHITEPAPERS
Home » Create Differentiating Value in the Supply Network Through Supplier Segmentation

Create Differentiating Value in the Supply Network Through Supplier Segmentation

March 22, 2012
SupplyChainBrain

Creating real differentiated supply base value starts with supplier segmentation.  Gartner Supply Chain Research finds a detailed analysis and a segmented approach to your supply base is an important aspect of building a resilient and secure supply chain while reducing complexity.  Supplier segmentation is a critical and necessary tool for visibility; it provides a standardized simplified foundational approach for supplier relationship management.

To deliver real differentiated value, these aspects must be considered in supplier segmentation:

• Not all suppliers are created equal.  Supplier segmentation provides a methodology and fundamental advantage to organize the supply base and the supplier information.  It provides a common language for procurement to manage suppliers globally.

• Technology is nascent answering the call for supplier segmentation visibility.  Spend analysis tools provide visibility to identify the large-volume-spend suppliers.   However there is currently no technology tool that brings in the additional supplier attributes and information that provide strategic value, such as scale; unique components, features and/or functionality; supplier/buyer power; and geographic location to markets, or high risk.

• Supplier relationships and the resulting supplier contracts must be aligned to supply chain types.  Using a low-volume / high-mix supplier for a high-volume supply chain will only create frustration for the customers, buyers and suppliers.  Creating supplier value requires a focus on optimizing the trade-offs of delivering unique customer value, low price, faster speed to market, and enhanced differentiation and services.

• Supplier segmentation is not a rigid siloed business process done every few years.  The high-tech, consumer products and retail verticals find supplier segmentation must be done every 6 months to ensure sourcing strategies stay current and are aligned with their market expectations.

• Recognize that the basic supplier segmentation types of transactional, commodity, strategy and bottleneck suppliers are just a baseline.  Real advantage is achieved when the supplier segmentation baseline is compared to the supplier's demand characteristics that they need to execute against (i.e., low price, cycle time, personalization, etc.).  This advanced segmentation then aligns the sourcing and supplier relationship management strategy accordingly.

• Creating a supplier segmentation framework that delivers differentiating value requires a long-term strategic organization direction and outlook.   Utilizing a sole-source and bottleneck supplier that provides unique product functionality can bring real market value for the customers, buyer and supplier in the short term.  However, the ability to create additional sources of supply for these unique items while satisfying increased market demands requires a supplier segmentation framework to manage this shifting supply base. Innovation, strategic advantage, joint profitability and market share opportunities can be uncovered with a strategic long-term approach.

                                      The Outlook

In 2012, Gartner expects more procurement organizations to implement advanced supplier segmentation methodologies. Segmentation will give way to lower procurement organization costs as transactional and commodity suppliers are outsourced; the procurement focus will continue to shift to managing the suppliers that are high-risk and bring significant strategic value.

In addition, expect technology vendors to begin focusing on the multitude of supplier attributes and company requirements to automate supplier segmentation methodologies.


Keywords: Supplier Relationship Management, Sourcing & Procurement Solutions, Technology, Business Strategy Alignment, Supply Chain Analysis & Consulting, Global Supply Chain Management, Gartner, Supplier Base Value, Supplier Segmentation Methodologies, Supplier Attributes

RELATED CONTENT

RELATED VIDEOS

Technology Sourcing/Procurement/SRM Business Strategy Alignment Global Supply Chain Management
KEYWORDS Business Strategy Alignment Gartner Global Supply Chain Management Keywords: Supplier Relationship Management Sourcing & Procurement Solutions Sourcing/Procurement/SCM Supplier Attributes Supplier Base Value Supplier Segmentation Methodologies Supply Chain Analysis & Consulting Technology
  • Related Articles

    In an Uncertain Economic Environment, You Must Create Agility Through Supply Chain Automation

    Driving Innovation and Value Through Supplier Collaboration

    Moving Beyond Compliance to Create an Efficient Supplier Network

SupplyChainBrain

100 Great Supply Chain Partners Issue 2009

More from this author

Wake up to Coronavirus Updates and the latest Supply Chain News!

Subscribe to our Daily Newsletter

Timely, incisive articles delivered directly to your inbox.

Popular Stories

  • Coronavirus-watch-Armada

    Virus Update: Australia Won’t Buy J&J Vaccine; India Approves Russia’s Sputnik V Vaccine as Cases Soar

    Coronavirus
  • Semiconductor

    Why Shortages of a $1 Chip Sparked a Global Economic Crisis

    Coronavirus
  • Shipping Costs

    Higher Shipping Costs Are Here to Stay, Sparking Price Increases

    Coronavirus
  • Robotic automation

    The Impact of Robotics on Supply Chain 2.0

    Coronavirus
  • Indoor Farm

    Vertical Farming: A Solution to Waste and Inefficiency in the Food Supply Chain?

    Sustainability & Corporate Social Responsibility

Digital Edition

Scb feb 2021 lg

2021 Supply Chain Management Resource Guide

VIEW THE LATEST ISSUE

Case Studies

  • Remote Implementation: A Dose of the Right Medicine for B2B Pharmacy

  • LSP Saves Customer $1.5 Million a Year With MPO Global Inbound Management

  • Auto Supplier Wows Key Client Using riskmethods Supply Chain Savvy

  • Integrating Shipping and Compliance Saves Conglomerate Millions

  • How a Consumer Goods Giant Upped Its On-Time Delivery Performance

Visit Our Sponsors

Yang Ming 6 River Systems ArcBest
Armada aThingz BluJay
Burris Logistics DSC Logistics DCSA (Digital Container Shipping Association)
DHL Resilience360 Flash Global Genpact
Geodis GEP GreyOrange
Honeywell Corporate Honeywell Intelligrated Infor
Inmar Kibo Commerce Kinaxis
Logility Magnitude Software MPO
Old Dominion Oliver Wight OpenSky
Paccurate Ports America Purolator
QAD Precision Red Classic Riskmethods
S&H Systems Snapfulfil TGW Systems
Tradepoint Atlantic Transportation Insights Watson Land Company
Westfalia Technologies Workjam
  • More From SCB
    • Featured Content
    • Video Library
    • Think Tank Blog
    • SupplyChainBrain Podcast
    • Whitepapers
    • Webinars
  • Digital Offerings
    • Digital Issue
    • Subscribe
    • Manage Your Subscription
    • Newsletters
  • Resources
    • Events Calendar
    • SCB's Great Supply Chain Partners
    • Supplier Directory
    • Case Study Showcase
    • Supply Chain Innovation Awards
    • 100 Great Partners Form
  • SCB Corporate
    • Advertise on SCB.COM
    • About Us
    • Privacy Policy
    • Contact Us
    • Data Sharing Opt-Out

All content copyright ©2021 Keller International Publishing Corp All rights reserved. No reproduction, transmission or display is permitted without the written permissions of Keller International Publishing Corp

Design, CMS, Hosting & Web Development :: ePublishing