Segmentation

Segmentation

Segmentation Overview 

Segmentation is used to understand historical demand, classify the product portfolio, find exceptions, and will help you pay extra attention downstream in the planning process. 

The segmentation module is designed to partition items based on their demand characteristics, giving you better insights into how you can best prioritize your time as a planner. This approach follows the Pareto Principle, which suggests that 80% of your results will come from 20% of the inputs. 

The most common use case of Segmentation is to identify the important items from a volume or revenue perspective.  

Use segmentation to: 

  1. Analyze revenue and volume figures for all raw materials, intermediate and finished products in your supply chain.
  2. Generate a forecast and inventory policy by segment. 
  3. Organize the collaboration hierarchy by segment. 








Item Categories 

Segmentation based on Item Category, which is determined by the structure within the Bill of Materials sheet.
  1. Click the “Finished Products” dropdown, change the selection to “Raw Materials” 
Notice the table updates with a different set of items. 

There are three possible Item Categories: Raw Materials, Intermediate Product, and Finished Product.  
  1. Finished items are those items that may have components but are not themselves components to other items. 
  2. Intermediate products are items that have components, and are also components to other products. 
  3. Raw materials. 

Item Classification -> Definition -> Scenario Validation
  1. Finished Good (FG) - Item that is not a component to other items - Check the BOM and if the item is not present as a component, then its FG; Scenario: If Item A has B as component and B has C as a component and if A is not a component to any than A is an FG
  2. Raw Material (RM) - Any item that has no component is a Raw Material - Scenario: If Item A has B as component and B has C as a component and C does not have component then C is a Raw Material
  3. Intermediate - An Item can be classified as a FG if there is a direct demand on the Item and at same time required as component to another Item then it can be both an FG or Intermediate - Scenario: If Item A has B as component and B has C as a component then B can be an Intermediate if there is no direct demand on B, else B is a FG if it has a direct demand

Filtering Items (Sales Split, Trend Split, Variability)

Items within an Item Category can be filtered and sorted based on a variety of demand characteristics, which correspond to the columns of the table. 
  1. Sales Split: A sales split is tied to the Pareto ABC rule. The default Pareto percentages are 80%, 15%, and 5%
  2. Variability / Variability Split: Standard Deviation / Mean categorized by Low, Medium, and High variability.  
  3. Trend / Trend Split: Trend measurement categorized by Active, Active New, Inactive, or Obsolete. 
Filtering items can be done by either clicking directly on the Sankey chart, clicking the dropdown, and by going into the Settings. 








Likewise, filter selections can be cleared by clicking on the whitespace within the Sankey chart or clicking the Settings button and clicking Reset to Default. 





Analyzing Segments

There are five types of analysis that can be performed. By default, the segmentation module initially shows the visualization for “Count.”  

  1. Count: the number of items in each Item Category 
  2. Sales: the sales volume and the dependent demand 
  3. Revenue: the revenue for the item 
  4. Margin: Revenue - COGS
  5. COGS: Demand * Item Unit Cost

Switch between Count, Sales, Revenue, Margin, and COGS by clicking those buttons located next the product dropdown. The Sankey visualization updates, but the Items in the table do not change.













This can also be shown by switching between the Flow and Pie toggle located to the right side of the module.






Mark an Item as an Exception 

Exceptions allows you to “bookmark” specific Item-Location combinations for manual review. 
  1. Click the “Exception” checkbox of a row you want to mark as an exception.
  1. Make sure the row itself is selected. 





  1. Click the publish button. The Publish Exception column is now checked.

 


Unpublish an Exception  

  1. Uncheck the Exception checkbox.
  2. Make sure the row itself is still selected and Click the publish button again. 

Mark Specific Item-Location Combinations as Exceptions 

We can take a more granular approach to exceptions by only marking certain ILC combinations as exceptions, instead of the item as a whole.  
  1. Click the Item cell of a row in the table.  
This shows all ILC combinations for the respective Item. 




Publish

Select rows, then click Publish to publish that segmentation data. 

Segmentation Settings

Under settings you can set the Date, Partition, and Analysis by under the General section, the Sales Splits, Variability Splits, Trend Splits, and Define the Exceptions. 








  1. Selecting a partition will analyze the data by the selected aggregate level. You can partition by Item, Location, and Customer.





Analysis By calculates the segmentation with 4 options:
  1. Volume - use shipments for calculations
  2. Revenue - use revenue values for calculations
  3. Margin - use revenue - (shipments * unit cost) for calculations
  4. COGS - use (shipments * unit cost) for calculations




For COGS, add optional "Cost History" input with Item_CD, Location_CD, Customer_CD, Date, Value, Currency fields. WithCategory( "demand" ) in a ModelInputSpecfication in demand/segmentation
load staged input data into a table demand/segmentation to be read during calculation. Modify segmentation calculation to use cost history if available, otherwise use item unit cost










  1. Sales Splits allows you to manually adjust the ABC splits for segmentation. 





  1. You can also add additional splits by clicking the Add new Split button.





The bar will warn you if your split adjustments have a remaining percentage or will create an overflow. 







  1. Variability Splits allows you to adjust manually variability for segmentation. 





  1. Trend Splits allows you to alter the different trends manually. 





  1. Define Exceptions allows you to create a new condition group with sales, variability, and trend. 




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