Logistics and Retail Management by Sparks Leigh

Author:Sparks, Leigh...
Language: eng
Format: epub
Published: 2014-03-13T23:22:39.460000+00:00

Table 6.7 Research findings

Supplier segmentation

The UK-based companies had no supplier segmentation. There was no attempt to relate the demand requirements to the suppliers’ response capability. This was also the case for one Italian and one Swedish company. Only one company used lead time as the basis of segmentation and adopted a mixed mode of supply for different suppliers. In all other cases the supplier segmentation was based on a textile premise of either yarn, fabric or product capability of the supplier. For the segmentation of yarn and fabrics this indirectly resulted in the development of a mixed supply base as there was a prominent trend indicating that more innovative materials would be supplied from Europe and basic produce from low labour rate sources of production. For the two vertically integrated companies (Companies 7 and 8) manufacturing competencies had been clearly defined and divided into different product areas.

Collaborative advantage

The study revealed that there was a wide understanding by each business of its collaborative advantage, but generally they all thought it was based on some element of service provision. Within the sample of 11 companies there was a wide understanding of the core service components that gave them an internal competitive advantage. The findings indicated that those companies that did not understand the need for a structured segmentation and targeting of their customers were less likely to be able to gain leverage from their perceived collaborative advantage. For instance, in their search for low-cost alternatives the sample merchandise manufacturer (Company 9) had failed to recognize the potential benefits from selecting partners in accordance with the value-adding activities that they provided to their customers. This had an adverse effect on their capability to provide an agile response to their customers, leaving them with residual stock and other production inefficiencies, damaging the internal operations performance.

The use of supplier segmentation in practice had in general not been applied to the same extent as product segmentation and customer segmentation. Five out of the 11 companies had failed to segment their suppliers and instead applied a generic approach to managing them all. However, several companies (eg Companies 4 and 5) had shown great benefits when marketing strategies were combined with customer-based product segmentation. By identifying the service level required by a specific customer group the product offer could be designed accordingly. Given the close connection between customer and product segments the distinction between the two was often hard to define. But whereas the connection of customers and products was of significant importance and frequently applied in practice, the actual need for distinct supplier segmentation was not as obvious. The lack of focused supplier selection and management within the industry might signify that such a component has no impact on competitive integration in agile supply networks. Nevertheless, the majority of companies in this study using such a segmentation strategy were found to be more focused businesses with a precise understanding of how the supply chain would fulfil their customers’ requirements, contributing to enhanced business performance. Consequently the absence of a segmentation strategy, within the context of the study, was seen to be significant.

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