Full definition
Supplier segmentation is defined as: Supplier segmentation is the classification of suppliers into tiers - typically critical, important and routine - so that onboarding effort, review frequency and evidence requirements match actual risk.
A segmentation model is usually two-dimensional: business impact if the supplier failed, and sensitivity of the data or access involved. The combination places each supplier in a tier with a defined evidence bundle and review cadence.
Without segmentation, teams either over-review low-risk suppliers (wasting everyone's time) or under-review high-risk ones (carrying invisible risk). Both are common failure modes.