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Two
by two matrix: A powerful tool
2
x 2 matrix is a simple but powerful tool for defining a problem
and to give valuable insights into developing a solution, says Uday
Arur
Creative
thinking is a critical element of a manager’s skills kitty.
Most of the people when confronted with a problem, very often, take
a seat-of-the-pants approach and come up with makeshift solutions.
The short shrift given to the decision making process is very often
dictated by the number, complexity and urgency of the decisions
which the manager has to face on a day-to-day basis. Feeling secure
in the knowledge that the chances of going wrong are 50-50, many
managers shoot off decisions.
Yet, each one has a process which is practiced unconsciously to
derive solutions to one’s problems - a process developed through
the past experience of tackling same or similar situations. However,
while defining and categorising the current problem as ‘same’
or ‘similar’ to the one which already encountered, there
is an element of a subjective understanding of the current problem
(limited by the information available) and its congruence with the
previous one and the solution applied. Therefore, on mapping out
the personal ‘problem-buster’ technique, it would greatly
help in arriving at a better understanding of an individual’s
mind processes and belief systems. There are however, several tried
and tested techniques, which are simple yet powerful tools which
help not only in defining the problem (which will be agreed upon
as a process by itself), but also provide valuable insights into
developing a solution. One such method is the 2 x 2 matrix.
Essentially the method requires:
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Identifying the two critical variables impacting the problem
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Inserting the variables on the appropriate axis
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Listing the items/ points in the appropriate quadrants
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Analysis of the items in each quarter.
The process would be better understood through an earlier assignment
where the matrix was used to encounter a production planning problem.
Understanding the Matrix
The assignment comprised of an orthopaedic device company which
faced difficulty matching it’s production plans to meet the
sales requirements. More often than not, there were high inventories
of slow moving items or there were infinite delays in fulfilling
order of the fast moving ones. The orthopaedic devices business
and its inventory requirements happens to be a highly complex and
demanding exercise. For example; take the case of screws - there
are endless iterations in terms of size, design composition and
application. Coming to the joints (like the ones in Prime Minister
Atal Bihari Vajpayee’s knees) a set would comprise anywhere
between twenty five to hundred items in terms of the joint and the
hardware required to put it into place. Then there are various other
tools, wires, clamps, cutters of all kinds and one would end up
with an inventory going up to hundreds if not thousands of items
of hardware (orthopaedic instruments are akin to a carpentry set)
which need to be ordered in the manufacture or fabrication of the
finished items.
Next comes logistics planning and inventory, as many jobs are given
out to smaller workshops. On discussion, the core of the problem
was identified that lay in the insufficient understanding and inefficient
tackling of two key variables - the first of which was the high
lead times required to manufacture some items, many of them with
high gross contributions. The other key variable was the sales trend
on which the production planning was based, here again the problem
lay in improper forecasting. The next step was to identify the items
in each quarter of the matrix.
The finished matrix looked like the diagram.
Following conclusions were drawn from the analysis of the fully
constructed matrix:
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The items in the top right hand corner - the High Sales demand
and High Lead-Time ones - would require top most priority. A further
break-up done in terms of high-profit and low-profit items helped
to further fine-tune the production plan and inventory keeping
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Items in the top left corner - the High Sales demand and Low Lead-Time
ones - again broken up into high and low profit items - were the
ones requiring low inventories (in terms of number of sale days)
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Items in the lower half required rethinking of a different sort
- should these products be reworked in terms of strategy or should
they be scrapped?
The 2 x 2 matrix thus helped the company derive a better understanding
of the complexities of the situation, optimise inventories and take
some hard decisions on the marketing and sales front.
The author Uday Arur is a Mumbai based Marketing Consultant.
E-mail: uarur@consultant.com
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