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Papers from EurOMA 2009
Edited by Patrik Jonsson and Dan Andersson
1 Introduction
Whilst the idea of market segmentation is a long-established concept ([30] Smith, 1956; [11] Frank et al. , 1972; [37] Wind and Cardozo, 1974), to date the implications for supply chain management have not been widely recognized ([16] Godsell and Harrison, 2006). Clearly, if customer groups exist with differing service requirements then it makes sense to try to optimally match expectations through some form of differentiated supply chain strategy ([13] Gattorna and Walters, 1996; [5] Christopher and Towill, 2000a; [17] Godsell and Harrison, 2002). However, supply chain solutions will not only be impacted by the needs of the customer. They also need to reflect the characteristics of the products, in particular the volume of demand and the variability of that demand ([10] Fisher, 1997). In a typical business, with a product portfolio measured in thousands of stock keeping units (SKUs), there will inevitably be significant differences across the product range in terms of the annual volume and demand variability at the individual item level. Because of these differences, it can be argued that "one size doesn't fit all" ([29] Shewchuk, 1998) when it comes to supply chain strategy. Whilst the importance of volume and variability of demand have been recognized for some time, the danger of using only product characteristics to shape supply chain strategy is that such an approach will not necessarily reflect the different needs of different market segments. The challenge is to create a supply chain capability that combines both market segment considerations and product characteristics.
In this paper, we set out an approach to demand profiling which we believe offers a practical means for considering both product and market characteristics to enable the development of a segmented supply chain strategy. It begins with an overview of the current approaches to linking market segment and product characteristics to enable supply chain segmentation, before describing the case research design. The results and analysis are then presented before the paper closes with discussion and conclusions.
2 Linking market segment considerations and product characteristics to enable supply chain segmentation
[26] Oliver and Webber (1982) were two of the first authors to propose the critical evaluation of factors that have significant cross-functional implications...