# WORKSHEET #6: Volatility and Its Measurement

Note:
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.

Step 1:

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.

Step 2:

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.

Step 3:

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:

Step 4:

Sum the volume of positive volatility for each Size/Role segment and for the market as a whole.

Step 5:

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.

Step 6:

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.