Supply Chain Segmentation: One Size Doesn’t Fit All

Last month JDA teamed up with IndustryWeek and Altera Corporation to present a Webcast on the topic of supply chain segmentation titled: One Size Doesn’t Fit All: Altera’s Supply Chain Segmentation Journey to Profitable Growth.  I’d like to point out a few highlights from the webcast that are useful for today’s manufacturing and distribution supply chain professionals.

Today’s enterprises 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 appealing value propositions to serve them is becoming increasingly critical for profitable growth and business retention.  Take an example of the ever-popular Smartphone that most of us are accustomed to using.  What we were able to do 20 years ago compared to what we can do today is a world of difference; however, we still want more.  Just like our customers.

As supply chain professionals, our efforts are intended to drive up the sales of our products or services, deliver effectively and cost efficiently and  lower the cost of goods and sales and admin expenses – all  while optimizing the use of our assets – whether that means manufacturing assets or work in process inventory.  However, with increased products and customers comes complexity, and with complexity comes the risk of misalignment issues. Previous one-size-fits-all supply chain strategies cannot adequately or profitably achieve this goal. Therefore, companies must segment their supply chain strategies and operations to balance cost-to-serve with the value to the business for each segment.  One successful company that exemplifies a high-performance supply chain, through implementing strategies of segmentation, agility, collaboration and investing in integrated planning and execution software, is Altera Corporation.

Similar to all companies, Altera has dealt with a number of internal and external changes, such as market volatility and increasing customer demands.  For example, in the last 14 years, Altera has doubled in size and has much larger number and more complex products to support.  In terms of fulfillment, Altera has gone from fulfilling demand almost exclusively through distribution networks to a hybrid model that includes both distribution and direct OEMs.  In response to external and internal forces, Altera evolved their supply chain to focus on tightening their S&OP processes, collaborating with key customers and suppliers, investing in key business process improvement and integrated planning systems to accelerate the speed of information exchange, and leveraging segmentation to appropriately tailor their supply chain model.  The result of these process changes and technology investments is Altera is able to meet customer service requirements with appropriate resource focus, increase speed and collaboration, and mitigate supply chain risk.

To be successful, companies need to follow the 5 core tenets of high performance supply chains.  Additionally, segmentation strategies must ripple through all aspects of supply chain operations. This will require careful analysis, planning and monitoring to balance higher service levels with associated cost-to-serve.  JDA offers advanced, integrated supply chain planning and execution technology to drive end-to-end value chains, including demand planning, master planning, inventory management, order promising, sales & operations planning, warehouse management, transportation, and labor management processes.  To learn more contact JDA.

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