Supply chain segmentation can be focused on customers or products, says McDaniel. “The crown jewel is to tie these two together.”

The concept behind segmentation is to more closely match services provided to what the customer is willing to pay. “Then you can drill backward to what suppliers, products and raw materials support those end customer segments,” McDaniel says. “On the supply side, you may be dealing with different types of raw goods all designed to feed those end customers.”

The first step to developing a segmentation strategy, and the biggest hurdle, is a real willingness and desire to do so, McDaniel says. “You have to acknowledge that you can provide a better customer experience or can become more efficient. Then you use big data to look at customers and supply chains to see how you can become more efficient, choose a pilot for testing and, if it works, decide if you want to scale it up.”

A sound segmentation strategy will lower costs, improve efficiency and boost profits, but more importantly, it will improve the customer’s experience, McDaniel says. “That’s a winning combination.”

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