Manufacturing and distribution companies face an ever-widening range of customer demands as they serve increasingly diverse markets across dynamic global economies. Understanding these changing customer demands and crafting attractive value propositions to serve them is becoming increasingly critical for profitable growth and business retention. Previous one-size-fits-all supply chain strategies cannot adequately or profitably achieve this goal. Instead, companies must segment their supply chain strategies and operations to balance cost-to-serve with the value to the business for each segment. That is the recipe for today’s high-performing supply chains.

The concept of segmentation is not new, however. For example, suppose you are a large food manufacturer with a significant portion of your revenue coming from Kroger or Albertson’s. Most likely you have a team and a set of strategies dedicated to each account. The value of their business to you warrants this level of service. The same cost-benefit ratio would not apply for every corner food store who also buys your products, though. You probably have a quite different supply chain strategy for those customers.

This difference in strategies in serving various customer segments based on their value to your business is what supply chain segmentation is all about. But the differences between segments may not always be as dramatic as this example. A large portion of your business may be in the middle ground, such as regional grocers or convenience store chains. These may be of insufficient total value to your business to warrant dedicated teams, but large enough to require more attention than a corner store. It is often in this middle ground that companies can especially leverage automated supply chain segmentation to positively impact their growth and profitability