Inbound Logistics Stratification

The performance and activity classification of suppliers should be used in conjunction with the SKU inbound activity classification to segment the inbound logistics activity into nine or more segments.  As a minimum, specific inbound strategies should be developed for A items inbound from A suppliers, A items inbound from B suppliers, … , to C items inbound from C suppliers.  This segmentation will suggest an initial rationalization of the supply base and a streamlining of the alternative logistics programs for specific inbound flows.


The logistics information system should support a segmented logistics policy with logistics strategies developed uniquely for ABC x ABC supplier-SKU segments. An example appears in Figure 1 below.  The figure presents an inbound logistics strategy developed for a recent client.  Suppliers are classified by size and performance into A, B, C, and D categories.  Seven commodities and A,B,C, and D classes of items based on unit sales and item popularity have been specified.  For each cross-section of suppliers and items an optimal inbound logistics strategy is recommended based on improvements in customer service and logistics cost reductions.  The optional strategies include:


  • Vendor managed inventories (VMI) for stable, popular items coming from reliable suppliers;
  • Cross-docking for time-sensitive products;
  • Traditional warehousing and delivery for slower moving products and commodities;
  • Consignment inventory for promotional items; and
  • Outsourcing to wholesalers for the slowest moving items in all categories.


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