Supplier Segmentation

Supplier segmentation is the process of dividing a company's suppliers into groups based on their importance, risk, and contribution to the business. This helps the company prioritize efforts, manage relationships more effectively, and allocate resources wisely. For example, some suppliers may provide critical, high-quality materials and require closer collaboration, while others might offer standard products with less strategic impact. Segmenting suppliers ensures the company focuses attention where it matters most, improving supply chain efficiency and reducing risks. Essentially, it’s a strategic approach to managing suppliers tailored to their significance to the business.