 Hello everyone, welcome to the course on supply chain digitization. This course is jointly being offered by three of the faculty members from IIM Mumbai, myself Professor Priyanka Verma along with my colleague Professor Sushmita and Professor Devapratadas. If you remember in the last session we have discussed our challenges in the supply chain and that was the inspiration to understand the need of supply chain segmentation. Looking back into the supply chain challenges we have discussed so many challenges which are affecting your supply chain activities which include demand forecasting, the way the inventory needs to be managed considering the complexity in the supply chain and the changes in the demand requirement from the customer side. Similarly, how the relationship needs to be managed with the suppliers, what are the different ways of managing delays in the transportation and logistics, regulatory compliances are there which needs to be followed in supply chain and followed by this there are sustainability and environmental concerns which is a very important requirement in today's time. So companies has to follow all these concerns, all these requirements and accordingly it has to be seen that how these challenges in the supply chain can be managed. So in the last discussion we have just listed few of the supply chain challenges. This is just a broad list and of course depending upon the type of supply chain which we have seen in our previous sessions you can recall from our first week discussions that the challenges in the supply chain will keep on changing. Now what is the solution for managing such challenges from the supply chains? We know that the problem is becoming complex and it is becoming more challenging. So the best way to resolve such problem is to break this problem into smaller parts and to find out some ways of managing these smaller challenges. So when you are breaking the bigger problem into smaller problems we can say in a way that we have some simple way of looking into those smaller problems. For that we can say that we can try to look into our supply chain in a revised way where we can try to segment our supply chain. The question arises that how these segmentation in the supply chain can help us in managing these challenges and parallely it is also important to understand what is the need of supply chain segmentation. So we can see that there is a link between the challenges in the supply chain and how segmentation in supply chain can help us in managing these supply chain challenges. So for that let us look into the need of supply chain segmentation. If we consider any supply chain we can see that the needs of the customer keeps on changing and depending upon the type of product, the type of business or type of sector there are diverse customer needs which needs to be fulfilled. Similarly if we start observing the demand patterns they are never constant, they are never static, they keep on varying, they keep on changing. So we can see that in our requirement for segmentation in supply chain one of the reason that we have to keep in mind is that demand pattern is never fixed and it keeps on varying. So that also has to be kept in mind for understanding the need of segmentation. Similarly the products that are being offered by the companies have got their own characteristics and they are not of similar variety or similar characteristics. So how can we look into the product characteristics to understand the need of supply chain segmentation? Similarly the other part is about operational efficiency which looks after the processes involved in supply chain, can it be done in a little different way or can it be clubbed in some groups so that we can have a better way of managing the supply chain. Most importantly in today's time as we all know that the cost reduction is one of the primary motto in supply chain where all the approaches are used to see that how the cost of supply chain can be reduced. And that's why one of the solution is to see can we apply supply chain segmentation for achieving this purpose. We also know about the risk management because managing such a complex supply chain always involves different types of risk. So how segmentation can help us in managing risk? In line with that we have the customer centric approach again specifying the need of supply chain segmentation which will be depending upon the type of customer how these supply chain segmentation is important and knowing that the market dynamics keeps on changing how it can help in adopting to the market dynamics. So we have seen the broad list which is specifying the need of supply chain segmentation. Let us go into this list one by one into further detail. So when we look into the first needs which is on diverse customer needs as you can see from here we understand that the customers have got diverse needs about the products that they are handling. They have got different expectations from the given products given supply chains and so on. So what can be done over here? Here we can try to segment our customers and a very very broad way of segmenting the customer is that we can look into our customers as are they the retail customers or they are some B2B clients. So if we have a retail type of consumers whose demands are required to be fulfilled then the supply chain has to be designed in such a way which looks after these personalized requirements of the consumers which can be something like home delivery options and accordingly the whole supply chain network design should be looking after this particular requirement. Whereas if there is a B2B client where another business is acting as a customer for the where the partner is again a big client. So for that the requirement is again in large quantities. And for that purpose you can see that you can the prioritization is always on bulk shipments what are the better ways of providing the shipments in bulk quantities, how the cost can be reduced while shipping bulk quantities, the procurement processes that is in terms of understanding your requirement and streamlining the whole processes is very important because you are handling with the large quantities and so on. So we can see that if we can have the segmentation of the customers it will help us in deciding the right strategies for them. So the solution for this again as we already discussed is to understand the need of that particular type of customer whether they are looking for some customized type of services or they are looking for the faster delivery or if it is focusing on how you can fulfill your order in a better way. So what are the strategies for that? So based on the customer requirement you can design your supply chain, you can manage all the requirements of a supply chain to cater to that particular requirement of the customer. The second need which we are going to trying to cover for supply chain segmentation is we understand that demand pattern is not constant and this keeps on varying. So demand can vary depending upon different type of markets that from where we are receiving the demand or from the regions or maybe it is linked with a particular type of customer groups. So we can try to create segments as high demand regions or low demand regions just for example there can be various other ways of creating segments for demand as well but just for an example we are trying to create the demand pattern depending upon the quantity of the demand to be satisfied. So in case it is a high demand region the expectation is always that the order is fulfilled on time and in order to ensure that this is achieved it is important that the product is available and to look that the product is available over here we can have strategies in the supply chain which ensures that there are large amount of inventory available at such regions and also the replenishment cycle should be very fast. So that these high demand can be fulfilled and there is no option for stock out and the product is always available whereas sometimes we have regions which has got very low demand and at such regions if we are having large amount of inventory obviously this will add cost to your supply chain. So what should be the strategy for such regions typically the best strategy for such region where the demand is very low it is always advisable to carry smaller stock levels and look after fulfilling the inventory on a just in time basis it means that as soon as the demand is received the strategy can be to fulfill it instantly. So in this way the cost can be saved and the way the demand needs to be managed at these through regions can be accordingly planned. So it is very important that we understand the type of the demand whether it is very high or very low and in line with that we can plan for the right amount of inventories to be carried or what type of replenishment cycles can be planned for that. Looking after the solution if we are having a proper alignment between the demand and the available inventory this can be easily translated into the production that is required to be done and the other decision as you all know which is also linked with the supply chain that is the distribution can also be accordingly planned. So we can see that just understanding the characteristics of the demand all the decisions about the supply chain can be accordingly managed. So if you understand the demand characteristics you can plan your inventory levels you can plan your production schedules and you can also see that what is the right distribution strategy for your corresponding demand. So we can see that the challenges what we have discussed in the previous session how this can be managed by creating supply chain segmentation. Similarly if you look for the need of supply chain segmentation we understand that in any supply chain there are variety of the products which are being offered. Suppose there is a company which is offering a large variety of the product how do we manage the supply chains for such business. So if we can have certain characteristics of the product which can help us in understanding the requirement again this can be better managed. So if you look into the life cycle of the product this again keeps on changing some are new products and some are already established products. So this again help in deciding the type of supply chain which is which can be associated with that. Similarly looking after the demand volatility or what is some specific requirement related to handling those products very very small issues as we can see from here or also playing a good role in deciding the need of segmentation. So if you look into the characteristics of the products suppose you have got products which are perishable in nature and some are which are durable in nature. It means the perishable goods cannot be carried for a longer duration of the time whereas durable goods have got longer shelf life. Knowing the perishable goods have got shorter shelf life it automatically confirms that it has got a very short supply chain maybe something like your bakery items or something like your milk items and so on. So knowing the perishability of the product because they are having shorter supply chains it requires expedited shipping and if we have digital solutions with the help of which we can track these perishable products this becomes very easy for managing them. It becomes easy to see their stock levels it becomes easy to see the requirements and accordingly the planning for fulfilling the demand can be done in a better way. So we can see that how digitalization can be helpful for managing shorter supply chains in case of perishable goods. Similarly if you have another type of product which have got higher durability means that they have got higher shelf life we can say that they can be stored for longer duration and hence the dependency of such products is more on the way the inventory is being managed for them. So if you have the right inventory management strategy for such products the supply chains for them obviously have another way of deciding the different strategies for such products we can see from here. Because the products have got higher shelf life the transportation again can be selected in such a way which are very cost effective and accordingly this will help you in reducing the overall supply chain cost. So in short what we have discussed about product characteristics that depending upon the type of product the inventory levels can be decided whether to keep lower inventory levels or higher inventory levels similarly whether what type of transportation modes are suitable. If it is perishable goods then quicker transportation modes are favorable whereas for durable goods we can go for cost effective transportation methods or modes and in case of the overall you can say that the focus is ensuring that how the supply chain can be more efficient and more profitable by understanding the product characteristics. This is another need of supply chain segmentation. The next is about operational efficiency. Now let us see that what this meant by operational efficiency. If we consider any traditional supply chains which are very linear supply chains and which are totally focusing only on cost. So when a supply chain is trying to minimize the cost it focuses more on consolidation and seeing that how the same activity can be done at minimal cost. In this process this supply chain faces lot of inefficiencies and in short it is the traditional supply chains are unable to consider the unique requirements of the customer. So that is one very important challenge in the traditional supply chains. But in today's time as we know the situation is not like that people want more and more different types of products, they want more variety in the products. So if we have the characteristics of the, if we have the segmentation of the products in form of whether the products are standard products or whether the products are customized the operational efficiencies can accordingly be managed. For example if a company is making a very standard product where the demand is already stable, some very simple example like salt manufacturing very standard product is there, there is no, not any customization needed. The production is always very continuous and we can have a systematic way of doing the things. This is a very standard process of doing the, of manufacturing a standard products. Whereas as soon as we talk about customized products, these type of customized products we know that requires a dedicated production line sometimes and this also gives you the flexibility in your scheduling and having a higher change over frequency. So how do we take care of this standard products and customized products to see that the operational efficiency is taken care. So in this case we can understand that the operational efficiency can be improved if we have the understanding of the specific requirements of the different type of products and accordingly the whole process can be tailored for that particular type of requirement or for that particular type of products. So if we have a standard products we can have the system designed for that this will help in reducing the overall lead time and minimizing the waste also as a by-product as you can see from here whereas if we have the customized product again the given processes can be designed specifically for that particular type of customized products which helps in attaining the requirement for the customer on a quick time basis. The next need is about cost reduction. This is one of the most important requirement in supply chain. The primary objective of all the supply chain is generally to manage the cost and this is equally challenging because we understand that the supply chain is not so simple. It has got huge complexity a simple reason being that it has got different number of partners located at different places having their different requirements. So if we are trying to reduce our cost what can be done for looking into this? So suppose we have got two categories of products. There is one category of product which are holding all high value items and there is another category of product which are quite standard products. So something if we talk about any standard product which can be following standard shipping as we already have discussed we can follow bulk packaging and the logistics associated with it can again be cost efficient but when we look for the high value products the high value products are something which have got a very high value associated with this. So obviously it requires some specialized type of packaging the shipping has to be very safe and that's why the premium type of shipping is required to be done and all the services which are linked with the high value product needs to be expedited. So we can see that again depending upon the way the products are looked after over here the whole strategy for managing these approach can be accordingly decided which helps us in reducing the cost. So in this process if we know that given product is a standard product then all the resources can be accordingly allocated in such a way that any unnecessary cost can be minimized and also it can be looked after the logistics cost which can be minimized and so on whereas if it has got a high value products so here we can have expedited shipping and in this type of products we do not worry about the utilization of the capacity the more focus is on ensuring about customer satisfaction. The next is about risk management we understand that because the nature of supply chain is global nowadays it is getting more and more complex and that is why it is being exposed to different types of risk. So what can we do for the understanding of for looking after risk management and what are the challenges in this particular category. There are different types of risk to which the supply chains are generally exposed there are disruptions which can happen due to national reasons or global reasons and which can impact your supply chain in a direct or indirect way and in past we have seen several such examples and accordingly how that has affected several businesses in their everyday in their daily operations. Similarly if there is any national disaster or there is any geopolitical event or any other factor which affects your supply chain even to a one partner in supply chain it affects the whole supply chain performance. Let us look into this in with a simple example of understanding the components suppose we have got two types of components there is one component which are very critical and is required for completing a given product. A very simple example like if we are looking for the semiconductors and it is required for making any type of automobile or any type of electronics. So knowing the criticality which is associated with the component and knowing the possibility of disruptions or other type of risk which affects the supply chain the best strategy for ensuring that these critical components are always available is by offering a dual sourcing option managing sufficient safety stock or staying in close supplier collaboration whereas those components which are not so very critical for such components single sourcing can be done and where the flexible arrangements can be easily accommodated. So we can see from here that depending upon again the criticality associated with the components which are required for making a particular product the strategies can be easily tailored to fulfill that particular requirement. Finally your customer centric approach is another need of supply chain segmentation where the challenges due to the expectation from the customers in sometimes the customers are looking for the personalized experiences and personalized services which creates a reason for us to look into our customer into different ways. So there can be some businesses where there are premium customers and there are standard customers in case of premium customers again the options can be done in such a way where exclusive offers and faster shipping can be offered whereas for the standard customers they can be offered some standard services with the standard shipping options and so on. So again we can see that depending upon the type of customers the supply chain can be accordingly tailored which can look after the customer requirements and also it can focus on ensuring that the customer remains loyal with the overall brand perception being carried forward. Talking about adapting to market dynamics we understand about there are about different factors which affect the economic conditions and the regulatory changes and accordingly they impact the supply chain requirements very much. This can be understood very easily with the help of an example of global south supply chain context where most of the countries in the global south they actually if you see have characterized by low income whereas the population of such countries are quite dense and the infrastructure are generally not so good and often they have got political or cultural marginalization. So we can see that this is creating a very different need for the companies which are going global and accordingly for them there is a requirement of a very different type of supply chain. This can be translated to make a segment of the market into two form that is emerging markets or mature markets where emerging markets require your supply chains to be quite agile and where the focus is always on ensuring that the demand fluctuations are fulfilled are managed properly and there is a rapid response to these fluctuations whereas mature markets are more suitable for the stable products where there is whole where the focus is completely on ensuring that the cost is efficient. So looking into the market also will help in managing the supply chains accordingly. So summarizing whatever we have discussed about the need of supply chain segmentation let us have a quick look into the different type of segmentation that can be created over here. So we can see that at different places we have followed different type of segmentation which can fulfill this requirement. So we can have customer segmentation, we can have product based segmentation, geographic segmentation, channel segmentation and so on. So when we talk about customer segmentation this looks after the requirements of different customer groups like you can have retailed customers in one group, wholesale customers in another group and so on. Similarly products can be customized on different characteristics, there is not one specific characteristics which defines the segmentation for the products depending upon the product requirement or the customer requirement these characteristics can be selected. Some characteristics which are quite useful are like demand volatility, shelf life or some specific handling requirement and accordingly the product can be characterized as high value items or fast moving items or so on or slow moving item or perishable items or so on. Similarly geographic segmentation can also be done where the supply chain can look after the geographical regions or market specific requirements which can be translated into understanding the demand pattern, the regulatory requirement, what type of distribution network will be good and so on and accordingly this can help in deciding the type of tailored supply chain strategies which will be useful for it. Channel segmentation is again another type of segmentation which helps in deciding in what different channels the products are made available such as direct sales or retailers or e-commerce and so on as we know that nowadays there are different type of channels available and each channel will obviously have a different type of supply chain will have different type of practices and accordingly a different delivery requirements. So how the supply chains can be tailored to look after this particular requirements. Similarly, we can also segment our supply chains based on value chain, based on demand based or based on inventory based segmentation as well. In value chain the value added activities can be seen that what value is being added at each stage. For example, the companies can try to have different strategies for suppliers or they can have strategies for manufacturers and so on and in each part of the value chain how the business can work or what strategies they can look after it to see that within the given supply chain the within the given value chain of the supply chain that whole function is getting optimized. Similarly, we have already discussed about demand where type of the demand characteristics can be a seasonality of the demand or may be variability in the demand and based on that the segmentation can be done as we understand that seasonal demand will require a different type of supply chain strategy and this accordingly will depend upon the type of products and the type of demand which is associated with it and in case of a very steady product which is almost having a constant demand throughout the year they can be managed with a very efficient supply chain easily. Lastly, when we talk about inventory based segmentation then it is again here we can apply some inventory characteristics to segment the products which are stored at the different part of the supply chain very simple ways of classifying these inventories which are quite popular are like ABC analysis, XYZ analysis, LITAM analysis and so on. So, in short in today's session we have seen that how the supply chain challenges that were discussed in the previous session can be managed by looking into the segmentation of the supply chain, but what are the different strategies of the supply chain segmentation which can be applied to manage these challenges. But remember one thing all the types of segmentation that we have discussed so far is just a very broad list of segmentation there can be more ways of dividing your supply chain into smaller segments and looking and deciding the strategies for it accordingly. Also in one point of decision not a single type of segmentation will work alone it always has to be a combination of the different type of segmentation in such a way that ensure the practitioners to decide about the right type of practices suitable for that particular type of combinations that have been selected. So, it is always a mix of all the segmentation that can be applied on a given supply chain and the combination of it will help the practitioners to decide the right strategy for managing that particular case. So, with this we will end today's session and we hope that we have connected the challenges of the supply chain and how the supply chain segmentation strategies can help us in managing that particular supply chain. Thank you everyone have a nice day.