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Supplier Segmentation is the allocation of Vendors to distinct groups based on specific criteria such as spend volume or criticality.
Segmenting your suppliers allows your business to give them an appropriate level of attention needed to ensure high levels of performance.
Focusing efforts on specific suppliers will help you to create a competitive advantage, reduce risk and build deeper working relationships.
Supplier segmentation can be done in a number of ways, but a good rule of thumb is: