Summary
The Larger Supplier Base Company should do the supplier Segmentation every 2 to 5 years time interval.
Based on the Supplier Risk and relative spend , suppliers can be segregated as such as Routine Supplier,
Collaborative Supplier , Bottleneck Supplier and Strategic supplier.
Author:
Kalandi Nayak
Company: Accenture
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Author Bio
Kalandi Nayak is SAP SRM (Supplier Relationship Management) Consultant in Accenture with 7
years experience in SAP MDM Catalog, Sourcing and Procurement (P2P). He has completed 3
Implementation project in large Companies in Auto Industry, Healthcare and Oil and Gas Industry.
Supplier Segmentation
Table of Contents
Business Objective ............................................................................................................................................. 3
Problem Statement ............................................................................................................................................. 3
Supplier Segmentation Benefit ........................................................................................................................... 3
Segmentation Criteria ......................................................................................................................................... 3
Segmentation Model ........................................................................................................................................... 4
Factors need to be considered for Supplier Segmentation. ............................................................................... 4
Segmentation Implementation ............................................................................................................................ 5
Related Content .................................................................................................................................................. 6
Disclaimer and Liability Notice ............................................................................................................................ 7
Supplier Segmentation
Business Objective
Problem Statement
Segmentation Criteria
Degree of interdependence
Level of spend by amount.
The Volume of procurement from the supplier.
Supplier Segmentation
Segmentation Model
Product
Service
Quality
Continuity
Capacity
Complex city of Specification
Social Responsibility
Suppliers Relationship with Competitors
Financial Stability
Environmental Issues
Supplier also a customer
Supplier Segmentation
Segmentation Implementation
Relationsp
Category
Routine Supplier
Bottleneck
Supplier
Collaborative
Supplier
Strategic
Supplier
Lower potential to
Minimize cost
Sole source
Maximize value;
lowest total cost
control number of
suppliers and
business volume
awarded
Medium to long
term
Critical need
relationship
manager; internal
customer
coordination
committee
Robust and frequent,
with some executive
contact
supplier
oversight
board; dedicated
relationship
manager
Robust and
multilevel,
with senior
executive contact
Joint effort, equal
investment
Implication
Driver
Price
Negotiation
Strategy
Maximize price
leverage
Presumed
Duration
Short to medium
term
Governance
Commodity group
portfolio manager
Communication
Limited to
transactional
exchange of info
Regular, though
limited in scope
Quality
Management
Managed on
exception basis;
leverage penalties
Managed on
exception basis;
leverage incentives
Planning
Annual; narrow in
scope
Suppliers
Viability
N/A
Investment in
Relationship
Low
Safeguard when
benefits outweigh
costs
Medium to low
Dependent on
Market
environment
Dedicated
relationship
manager
Joint effort;
customer investment
driven by switching
costs
Joint and frequent;
time horizon varies
by context
Understand and
Monitor
Medium
Win/Win Maximize
joint gain and good
precedent
Long term
Integrated, frequent,
and long term
focused
Safeguard
High
Supplier Segmentation
Related Content
http://www.supplymanagement.com/
http://sdn.sap.com
For more information, visit the Supplier Relationship Management homepage. .
Supplier Segmentation