Supply Chain Strategy
As part of any supply chain management review, an analysis of the diversity in your supply chain should be undertaken. The principles of supply chain segmentation are simple; "one size does not fit all” and that "averaging leads to inefficiency". Where diversity is found, a supply chain segmentation strategy maybe required as part of an effective supply chain strategy. To outline the basic principles of supply chain segmentation an example based on product value density and throughput is shown below.
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The diagram to the left highlights a range of Product Value Density ratios, defined as the product value divided by the chargeable weight of the product.
Intuitively, we would never build the same supply chain for any of these individual products. But when we have such diverse products within one organisation there is a tendency to manage all products within one supply chain. This is a suboptimal solution.
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When product value density is considered against throughput, it becomes a very powerful tool for supply chain strategy and network redesign. Products with higher product value densities and lower chargeable weight throughputs (such as the microchip) are suited to more centralised solutions.
In the Sony case study, we highlight the significant savings that can be achieved when supply chain segmentation enables diverse products to move through different channels. |
Please view the case study to see an example of supply chain segmentation applied as the basis for a highly effective supply chain strategy.
To discuss how we can help you with supply chain segmentation and strategy, please contact us.
