Supply Chain Alignment and Segmentation Directed by Customer Logistics Requirements

Purpose: Companies are pressed to adopt customer value strategies in order to grow profits and ensure long term survival. The objective of this paper is to share a procedure for categorizing customers by logistics demands and identify underlying consequences and efforts for internal and external supply chain flows. Methodology: The study adopts an inductive approach and uses the case method of investigation. A longitudinal case study was developed from primary (semi-structured interviews, workshops) and secondary sources. In addition to information gathered from interviews and workshops, hundreds of pieces of documentation were used to reconstruct past events (including past customer orders, documents from order initiation to order fulfilment) permitting triangulation. Pattern-matching logic was employed as case development progressed, continuously comparing 1) theoretical background and 2) customer segmentation made at different points in time from expert opinions. Findings: Among the factors influencing customer alignment and segmentation from a supply chain perspective, lead time, order quantity, product specification, storage and production mode have major impact on 1) the appropriate allocation of customer into segments and 2) cause-based allocation of costs. Research limitations: The study is limited by the specific research setting (country and industry) and the applicability to producing companies. Practical implication: Assists Supply Chain managers in prioritizing customers based on customer logistics requirements. Originality: A practical procedure using customers’ logistical requirements to develop customer segments and delivery channels is offered beyond the extant literature.