Branded businesses are experts at customer segmentation, understanding how any why different groups of their consumers buy their product.

 

It’s a very long time since consumers were segmented only by age, gender or geography.

 

In contrast, a large company might have hundreds of suppliers, but segmentation might only be by size of supplier or product category. Sometimes they may also identify some suppliers who can add value through R & D. From our experience of auditing supply chains there are many other ways that suppliers can be segmented.

 

In one case we reviewed the attitude to risk management by over one hundred suppliers of an FMGC brand in Asia.

The client had suffered from supply chain failure in the past and wanted to understand how suppliers managed risks in their business. Of course, we found that suppliers segmented into distinct groupings. A few were quite strategic at how they managed risk both within their business and with their suppliers, most focused on risk management within the business and within that group most focused on physical risks such as fire or flood but despite that, their time horizon was quite short. They were most concerned about what might disrupt production in the next two weeks or a month, few had a view about risks that might impact them in the long term.  

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From that segmentation we were able to develop action plans with different groups to show demonstrable improvement to how they managed risk from making simple changes through to implementation of tried and tested business continuity plans.