brief

Quantify diversity using Pareto charts, time-series plots and the Herfindahl index

Have you heard the complaint 'our supplier base is growing ever more complex'? Yet, how to assess and quantify this statement?

We propose using three simple tools:
1) The well-known Pareto chart for 'snapshots' at any given moment in time
2) The equally well-known time-series plot to study trends and
3) The less-known (inverse) Herfindahl index to assess portfolio complexity over time.

These tools
– allow focusing action and improvement to where they are most impactful
– present a robust analytical basis for strategic or tactical moves
– are must-haves for anyone wanting to thoroughly  understand the diversity in a portfolio of customers, suppliers, products and much else.

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