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.
– 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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