Advantages of demand segmentation

by Inside Logistics Online Staff

Recent research has revealed the advantages of using demand segmentation to manage volatility and channel shifts.

The ability to research, compare and purchase products across multiple channels at any time creates additional complexity that can challenge a supply chain organization’s ability to generate an accurate forecast. Aberdeen’s vice-president and group director Bryan Ball conducted research to identify the strategies best-in-class companies employ to turn these challenges into opportunities for differentiation and growth.

The research found demand segmentation is a key capability that sets leading supply chains apart.

Highlights include:

  • Demand segmentation users show a 20 percentage point customer service level advantage versus non-users;
  • Best-in-class companies realize a 67 percent higher forecast accuracy rate at the family and SKU level;
  • Demand segmentation users are 57 percent more likely to optimize inventory and service policies to maximize cash flow and profitability.

“Creating a demand-driven supply chain starts with understanding who your customer is and developing the strategy to profitably serve them at the time, place and price they are ready to buy,” said Karin Bursa, executive vice-president at Logility, which sponsored the research.

“This research from Aberdeen highlights the importance of demand segmentation to identify and profitably satisfy specific market, channel and customer needs.”