DC Velocity - IdeaBook 2014

10. Automate policy management

The business optimization center described above is responsible for policy analysis, deployment, and management. The center is also responsible for ensuring that the various policies related to promising, fulfillment, inventory, transportation, manufacturing, and sourcing are coordinated, aligned, and synchronized in time.

Leading companies today are starting to automate the administration of segmentation policy. In such cases, the business optimization center gains approval for a certain strategy for a customer/product intersection, along with a deployment date. The policy is then automatically deployed into the relevant systems on that date. Concurrently, various automated workflows ensure proper communication and approval.

SEGMENTATION GAINS GROUND

In previous generations, companies that wanted to create
unique ways of serving customers or unique capabilities
for a product would add physical assets. Today, they must
utilize the same physical assets to serve customers and dif-
ferentiate service, segmenting their supply chains by means
of information and decision making within a management
framework. Supply chain segmentation, therefore, advances
a continuing macro trend toward information replacing the
need to add physical assets.

Companies that successfully deploy segmentation strategies will improve the reliability of their customer service while increasing profitability across their product portfolio. Segmentation does so through better alignment of supply chain policies to customer/product value propositions. It also increases asset turnover (both fixed and inventory) through inventory positioning and aligning manufacturing and distribution assets to customer value propositions and profitability. Finally, it improves customer service and sales by increasing the reliability of delivering on promises. With so many financial and service benefits, it’s no wonder that Dell and other highly successful companies are adopting supply chain segmentation strategies today. c

Notes:

1. Gartner Inc., “Case Study for Supply Chain Leaders: Dell’s Transformative Journey Through Supply Chain Segmentation” (November 2010).

2. eyefortransport, “Chief Supply Chain Officer Strategy Survey 2011” (June 2011).

KELLY THOMAS IS GROUP VICE PRESIDENT, GLOBAL ACCOUNTS AT JDA SOFTWARE GROUP INC.

Strategies

MTS, 5 pre-
configured packages
C TO, limited
pre-configured
MTO, customer-
configured
Customer-specific
requirements
Push Pull
Push Pull
Push Pull
Pull
Engineering T2 T1 Assembly Customers
Customer Value
Proposition
(LT = lead time;