Supplier Segmentation

The idea of supplier segmentation is pretty simple - grouping suppliers in a supply base by their impact on the business (Rogers, 2009)

Information about Supplier Segmentation

Supplier segmentation is the important part of supply relationship management which incorporates differentiating suppliers, preparing supplier segmentation teams, reviewing supplier segments, identifying opportunities with suppliers, developing product/service agreements, implementing agreements, measuring performance and generating supplier/cost profitability reports (Douglas and Lambert, 2004; Sollner and Rese, 2001).

According to the material/service supplied suppliers can be classified into one of four quadrants: commodity, strategic, standard, or key. The classification can also depend on money spent, product complexity, breadth of supply base and the volume of supplied goods and/or services (Bueler, 2006). Overall, there are four general categories of suppliers.

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