Customers should consider inbound supply chain segmentation as a logical step in their journey toward supply chain excellence.

Segmentation, as you have likely heard or read, is a strategy that replaces the typical "one-size-fits-all" supply chain model with multiple configurations customized to satisfy more targeted goals. These objectives can be based on end-to-end metrics such as cost, expected service levels, and both manufacturing and final delivery locations.

At this point you are probably thinking: "If I replace one supply chain model with several models, doesn't that increase the complexity of an already complicated process?" You would think so, but in actuality, segmentation can help to simplify your supply chain. Through segmentation, OEMs can better align their resources so that they are not, for example, spending money delivering commodity products ahead of demand or holding up production waiting for custom parts to arrive with a consolidated shipment of standard products from overseas.

If you are considering a segmented supply chain approach, one of the first steps you might consider is to profile the kinds of products you are procuring. This analysis will help to identify risks associated with the sourcing of the parts, and therefore provide direction into the type of supply chain model you will want to execute (e.g., one focused on efficiency, responsiveness, or agility). Among the characteristics you should consider to create a practical profile are volume, lifecycle, configurations, transportation requirements, regional customs and tax requirements, and lead time.

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