August Logistics Market Snapshot

We make decisions in the workplace every day. As we all know, choices drive end results. How can one be confident in choices in the workplace where the end result is reflective (good or bad) on the decision maker?

The XY Matrix, as discussed in Lean Six Sigma Logistics: Strategic Development to Operational Success, offers an approach to decision making that is data-driven and thorough.

As a lean logistics specialist at LeanCor Supply Chain Group, I am assigned the task of choosing freight carriers for my customers who are shipping goods. The number of carriers is endless and the variations in their offerings is infinte. Do I consider price, transit, customer service....? What is most important to my customer? What does my customer perceive as value-add? What does my customer believe to be a waste of its money?

My customer is counting on me to make the right choices in order to sustain its lean supply chain.

Example XY Matrix For Selecting a Project

Roy Disney famously said, “It's not hard to make decisions when you know what your values are.” Values are where to begin when creating an objective XY Matrix. Find out what is most valued by your customer (i.e. Voice of Customer - VOC). Often times the customer isn’t even sure. Or within your customer's individual departments, different variables are considered important (which may clash with other departments). How can a decision be made with so many options and variables? Brainstorm with your customer to identify critical variables to the decision on hand. You could also create a customer survey listing variables and asking them to rank each in importance (see figure from XY MATRIX - Step 1). Always make sure to include the customer on this part of the decision making process.

Based on the information gathering from Step 1, you will need to place a weighted average for each variable. The weighting needs to add up to 100, but can be divided any way. Avoid dividing evenly between the variables. Also, place lower values on “soft” or subjective variables. These would be variables based on personal opinion, perception, or those lacking data. For example, a variable such as "Relationship with Carrier Account Rep," should receive a lower weighted average as this is based on opinion. It is okay to include subjective variables, as they do lead to our decision making whether we want to admit to it or not! The XY Matrix does allow for consideration of a subjective variable - just be sure to give it a lower weighted value.

Step two in the XY Matrix is to list the potential options (see figure Step 2). Your options here can be as many as you want. But be warned, this adds to the potential for a tie in the results. Many options can also force the survey to be skewed, as the customer/customer team may not be familiar with all the options and their rating selection may not be as accurate. It may even be wise to have a “no opinion" option on the survey.

Next in the ranking - Step 3. Rate each item on a scale that is agreed upon by everyone involved with the XY Matrix. I have found that using a scale such as 1-3-5 works best, as this forces the ranker to make a defined choice. A larger range in the scale (such as 1 – 10) creates a wide range of numbers and does not usually end with a stand out on the matrix. Be sure to clearly define the scale to those involved! Define which end of the scale is good/high/top pick and which end of the scale is bad/low/not a good pick. You would be surprised to find this simple step, if not defined correctly, can lead to a disastrous choice being implemented. Also take heed to NOT inform the rankers of the weighting given previously. Just keep that hidden until it is time to make calculations. Hiding the weighted average prevents the rankers from calculating in advance - swaying the end result.

After the above three steps have been completed, Step 4 is to sort the items by the total score. Once you have quantified the XY Matrix you will have a subjective answer to the question at hand!

Matrix Title: XY- Carrier Selection

STEP 1: Variables (Y-Axis)

  • On Time Percent
  • Relationship with Carrier’s Account Manager
  • Price
  • Coverage

STEP 2: Carrier Names (X-Axis)

  • Lickety Split Hot Shots
  • A2Z Trucking
  • Sally’s Surface Transport
  • My 2 KIDS Trucking
  • Transport MY Way
  • Wanted Now Express

If you have found this tool to be helpful in solving your problem, think about learning more at the Georgia Tech Supply Chain and Logistics Institute this fall. The next course in the Lean Supply Chain Professional series is Building the Lean Supply Chain Professional (October 16-18). Register today. Hope to see you there!

Written by Sally Proffitt, Lean Logistics Specialist at LeanCor

Posted by LeanCor Supply Chain Group

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LeanCor Supply Chain Group is a trusted supply chain partner that specializes in lean principles to deliver operational improvement. LeanCor’s three integrated divisions – LeanCor Training and Education, LeanCor Consulting, and LeanCor Logistics – help organizations eliminate waste, drive down costs, and build a culture of continuous improvement.

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