The main purpose of supply chains is to ensure the organisation meets the needs and expectations of the market segments being targeted in the most efficient manner.
Yet, there are far too many instances where companies are internally focused on limiting the cost of service with little if any regard for the needs of the customer. This is also evident in the number of organisations who rely on only one supply chain structure to meet the needs of customers across vastly different market segments.
The problem often faced by SLTs is a lack of clarity around which market segments are being targeted and what the needs and expectations of each are. Unless the commercial team defines and shares this information the supply chain will struggle to assess what they need to put in place to satisfy all customer requirements.
Once the needs of each market segment is known, the SLT needs to determine whether their current supply chain structures are able to satisfy these requirements. Determining the implied demand and supply uncertainty of each market segment assists in determining which of the following two decisions to take.
- Given the gaps between your current offering and what each segment requires, the company must decide if they are willing to make the required investments to close them.
- If the answer to this question is no in relation to any market segment, then the company needs to acknowledge that they will not be able to support the customers with these needs and opt out of supporting them.
Understanding the implied uncertainty that exists in each segment helps in determining where the push/pull boundaries will lie across your supply chain. This inturn indicates at which point across the responsiveness spectrum each supply chain node needs to perform.
Once armed with this information your sourcing department will know what performance measures will need to be met by each supply partner of each supply chain in order to satisfy customers of each market segment.
When the requirements of each market segment is shared it often highlights the need for more than one supply chain to meet each segment’s requirements and multiple supply chain structures will need to be developed.
Aligning your supply chain’s capabilities to the needs of each market segment is often referred to as achieving Strategic Fit. This is paramount in developing a supply chain that is fit for purpose.
If you are interested in discussing how we could assist your team in aligning the capabilities of your supply chain to the needs of your customers contact us for more information at www.coteriescm.com
ALIGNING SUPPLY CHAINS TO MARKET SEGMENT NEEDS
Supply Chains need to be more responsive
