APICS - CSCP 2020 Module 2 Section B

The key processes that supply chain managers need to be able to perform related to managing the relationship with supply chain partners are

• Managing relationships with customers

• Managing relationships with suppliers.

The following is a general overview of these processes. The information required to plan and execute these processes is presented in this sections chapters.

The process of managing relationships with suppliers involves the following steps:

• Using change management to internally align the organization to promote information sharing, collaboration, and mutual profitability

• Acquiring supplier relationship management software to automate transactional interactions, monitoring, measurement, and analysis with any level of supplier and information sharing with key suppliers

• Calculating total cost of ownership for key supplier materials

• Selecting the right partners for the given strategy

• Developing goals with suppliers for achieving a desired relationship type

• Negotiating mutually profitable contracts and ground rules

• Appointing managers for key supplier relationships or alliances

• Developing long-term relationships with key material suppliers

• Working with strategic allies to add value to products, reduce operational costs, enable strategic or market growth, and hone each partys expertise

• Realigning processes, information flows, and workflows to eliminate your or your suppliers redundancies or non-value-added work

• Measuring or auditing supplier performance and compliance with voluntary requirements or certifications

• Conducting periodic course corrections based on performance

• Reevaluating selected suppliers periodically for strategic fit

Potential customers form a very large group that can be segmented based on market analysis and information from existing customers. Segmentation can be based on any number of criteria selected to suit a particular purpose, and each class may be segmented in more than one way. Market segments can be defined by demographic characteristics such as gender, geography, age, occupation, and wealth. Demographic categories can also be refined or customized. For example, geographic segmentation could be based on the likelihood of visiting a particular retail location, by ZIP or area code, or by zones that contain relatively equal demand (i.e., the size of each zone would vary). Customers can also be segmented by attitudes or psychological profiles, such as willingness to engage in social media or self-identification in a social group such as a biker or a wine lover.

During product or service design or redesign, marketing can ask more specific questions about the potential market. As always, the basic questions are the best questions: Who? Where? When? Why? What? How many? In other words, who is interested in the new product, and where are they located? Are they low-income urban apartment dwellers, suburban homeowners, or farmers and ranchers? The answers to such questions constitute segmentation.

The primary reason to identify and understand market segments is to increase the organizations profits (or its equivalent) over the long term.

According to the APICS Dictionary, 16th edition, customer segmentation is

the practice of dividing a customer base into groups of individuals that are similar in specific ways relevant to marketing. Traditional segmentation focuses on identifying customer groups based on demographics and attributes such as attitude and psychological profiles.

When discussing market segments in a supply chain, there may be more than one perspective of who the customer is. For example: