From the course: Supply Chain Foundations: Supplier Development and Diversity

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Performing supplier segmentation

Performing supplier segmentation

From the course: Supply Chain Foundations: Supplier Development and Diversity

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Performing supplier segmentation

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- Let's say you're in a rush and go to the grocery store with a list of apples to get. Red Delicious, Granny Smith, Fuji, and Honey Crisp. But when you arrive, you see a huge pile with a mix of apples, forcing you to sort through them one by one. Wouldn't it be easier to find the ones you wanted if they were sorted beforehand? Well, that's the way it is with supplier segmentation. You don't want to have to go through a large number of suppliers to know their value. You want to know quickly which suppliers have the right capabilities and capacity to align with your organization's strategic business objectives. With fewer suppliers, you can focus on securing all risk throughout the supply chain, form long-term relationships, and create value by reducing transaction costs. Described by Peter Kraljic in a Harvard Business Review article in 1983, the Kraljic Matrix is one of the most effective ways to deliver…

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