Supply Chain Cost Management: The AIM & DRIVE® Process for Achieving Extraordinary Results

Weighted Value of Cost Drivers

After filling in the impact values for each box in the matrix, the next step is to determine which of the cost drivers have the biggest impact on total costs. Of course, if the cost elements you have listed on the left-hand side of the model are more or less equal in value then it would be appropriate to simply add the values in each column of the matrix and select the one or ones with the highest total score. However, in most cases, including the customer service example, the cost elements are not equal. That’s why we created the weights. Now, it is a matter of taking each column, multiplying the impact value by the weight of the respective cost element, and taking the sum of the weighted values. This is the weighted ...