BY KELLY THOMAS, JDA SOFTWARE
steps
to GREATER
10
PROFITS
Segmentation lets companies boost profitability
by tailoring their supply chain strategy to each
customer and product in their portfolio. Here
are 10 key practices that will ensure success.
In the 1990s Dell revolutionized both the computer industry and supply chain management with its direct-to-consumer business model. For the past several years, however, the company has been
transforming its supply chain into a multichannel, segmented model,
with different policies for serving consumers, corporate customers, distributors, and retailers. Through this transformation, Dell has saved US
$1.5 billion in operational costs1 and has moved to the number two
spot on Gartner’s “Top 25 Supply Chains” list.
Dell is one of a number of enterprises that are benefiting from supply chain segmentation, a process by which companies can create profitable one-to-one relationships between their customers and their supply chains. Under this model, different customers associated with different channels and different products are served through different
supply chain processes, policies, and operational modes. The goal is to
find the best supply chain processes and policies to serve each customer
and each product at a given point in time while also maximizing both
customer service and company profitability.
By understanding the profit profiles of their customers and products,
companies can tailor a more profitable supply chain strategy to each of
them and thus increase the overall profitability of their portfolios.
Many companies today, however, still use “one size fits all” supply chain
processes and policies, overserving some customers and underserving
