A method, apparatus and computer-readable storage media are provided for determining, at a physical switch configured to interface with a plurality of physical servers via a plurality of corresponding physical ports of the physical switch, a number of virtual local area networks (VLANs) serviced by the plurality of physical servers, each of which is configured to service one or more virtual machines in one or more of the VLANs. A plurality of VLAN compression groups are automatically defined such that a port VLAN count of the physical switch is reduced, wherein the port VLAN count identifies a number of VLANs that interface with the physical switch via the plurality of physical ports. The one or more VLANs are automatically assigned to one of the VLAN compression groups.