On the Stratification of Product Portfolios

TL;DR

This paper discusses the importance of automated ABCD segmentation algorithms for large product portfolios, emphasizing design features that enhance their strategic and operational utility in supply chains.

Contribution

It introduces three key features for designing improved automated ABCD segmentation algorithms for large product assortments.

Findings

Enhanced segmentation quality through proposed algorithm features

Improved alignment of segmentation with strategic priorities

Facilitated automation for large product portfolios

Abstract

Stratifying commercial product portfolios into multiple classes of decreasing priority, ABCD analysis, is a common supply chain tool. Key planning parameters that drive strategic and execution priorities are tied to the resulting segmentation. These priorities in turn drive supply chain performance. For large product assortments, manual segmentation is infeasible so an automated algorithm is needed. We therefore advocate that careful attention be paid to the design of such an ABCD algorithm and present three key features that can be incorporated into such a calculation to improve its quality and commercial utility.