WORKSHEET #6: Volatility and Its Measurement
This worksheet draws on the results of customer data gathered using Analysis 2
and Analysis 66
. Please review these analyses for further information and context for the steps in this worksheet.
This worksheet uses the data in the four worksheets: Worksheet #2: Segmenting Customers by Size, Worksheet #3: Defining the Purpose of Roles, Worksheet #4: Creating the Customer Size/Supplier Role Matrix and Worksheet #5: Serving Customer Segments on the Size/ Role Matrix found in Basic Strategy Guide Steps 2, 3, 4 and 5, as well as Subject C in Analysis 66.
List the suppliers in each supplier role today and three years ago. See Worksheet #3: Defining the Purpose of Roles, columns 6, 9, 12 and 15.
Get the volume and percentage purchased in each customer relationship in each role three years ago and today. See Worksheet #3: Defining the Purpose of Roles, columns 7, 10, 13 and 16.
Calculate the volume and percentage of positive and negative volatility, as well as growth, in each customer relationship. (See Analysis 27 for a complete explanation of how to do these calculations.)
Conduct the following steps on the Size/Role matrix totals as it exists today:
Sum the volume of positive volatility for each Size/Role segment and for the market as a whole.
Divide the sum of the volume of positive volatility in each Size/Role segment by the total sales in each segment. Do the same calculation for the market as a whole. Convert these results to percentages to arrive at volatility in percentages of annual sales volume by Size/Role segment and for the market as a whole.
Divide the percentage volatility in each Size/Role segment by the percentage volatility for the market as a whole. Multiply that result by 100 to arrive at the index for positive volatility by size/role segment.