The main purpose of supply chains is to ensure the organisation meets the needs and expectations of the market segments targeted in the most efficient manner.
Yet, there are far too many instances where companies primarily focus on internal processes to limit 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 market segments targeted and the needs and expectations of each. 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 are known, the SLT needs to determine whether their current supply chain structures are suitable 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 the capabilities of your current supply chain and what each segment requires, the company must decide if they are willing to make the required investments to close them.
- If there is a lack in willingness to make the necessary investment, the company needs to acknowledge that they will not be able to support customer needs of a segment and opt out of targeting 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 in turn indicates at which point on the efficiency/responsiveness spectrum each supply chain node needs to perform.
When the requirements of each market segment are clear it often highlights the need for the development of more than one supply chain structure to meet each segment’s requirements.
Armed with this information the formulation and deployment of supply chain strategies is next.
Central to the roll-out of strategies will be the sourcing department knowledge, skills and abilities to align with suitable suppliers to ensure their partners support material and other strategies in satisfying customer needs of each market segment.
Achieving strategic fit is the practice of aligning your supply chain’s capabilities to the needs of each market segment, which is essential in deriving value across the supply chain.
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
