Small and medium-sized organizations have successfully implemented supplier segmentation based on business criticality, like in the example below: Priority 1 should include a small number of strategic suppliers as they often supply high-value and low-volume goods or services vital to your business operations.
Because of this, suppliers must be divided into different groups. Supplier segmentation is the process of dividing suppliers into distinct groups based on needs, characteristics, or behavior. This process incorporates: generating supplier/cost profitability reports.
Priority 1 should include a small number of strategic suppliers as they often supply high-value and low-volume goods or services vital to your business operations. They are helping you grow your business by making investments in technology and new product development, and therefore they are high-risk and should be monitored closely.
Whichever method you choose, the result should allow you to select the appropriate level of engagement with suppliers. However, keep in mind that supplier segmentation should be performed at least once a year to ensure the best outcome.
In this recorded training seminar, we explain the concept of price segmentation and why it's such a powerful and important tool. We explore the essential process and even walk through a step-by-step exercise, building an example price segmentation model from scratch.
It can be difficult to know if your price segmentation model is as effective as it should be. This 21-point diagnostic assessment helps you measure how good your model really is and uncover potential areas of improvement.
Use this example visual presentation to inspire and aid your efforts in explaining the concepts of price segmentation to others inside your organization.
However, keep in mind that supplier segmentation should be performed at least once a year to ensure the best outcome. Should one of your key suppliers fail to fulfill its offering, this could cause you to reputational damage and even force you to shut down business operations. Supplier management.
Correct supplier segmentation can help drive and deliver increased value for your supply chain. Some organizations segment their suppliers by how much they spend with them, the general thought being the more we spend with them, the more important they are for our organization. However, this is not always the case.
Priority 1 should include a small number of strategic suppliers as they often supply high-value and low-volume goods or services vital to your business operations. They are helping you grow your business by making investments in technology and new product development, and therefore they are high-risk and should be monitored closely. ...