• Safak ISIK 12/11/2020 12:47PM

    In Category Management

    Criteria of Kraljic's Purchasing Portfolio Matrix

    Dear All,
    For my PhD project, I am trying to determine which criteria and factors should be included for two dimensions of well-known Kraljic's Purchasing Portfolio Matrix. The ones I have collected so far from the original Kraljic’s article (marked with *) and also from other sources are listed below with no order of importance. I appreciate your comments on proposed criteria and also any other extra criteria you may suggest with a short explanation. Thank you in advance.

    STRATEGIC IMPORTANCE OF PURCHASING (or IMPACT ON PROFIT)

    • Volume/monetary value of purchases (*)
    • Percentage to total purchase cost (*)
    • Switching costs (*)
    • Impact on end product quality/reliability (*)
    • Impact on business growth (*)
    • Impact on competitiveness
    • Additional value on product differentiation
    • Impact on production or supply network continuity

    COMPLEXITY OF SUPPLY MARKET (or SUPPLY RISK)

    • Product availability/scarcity (*)
    • Number of suppliers (*)
    • Entry barriers for new suppliers (*)
    • Storage risks (*)
    • Competitive demand (*)
    • Rate of technological advances (*)
    • Product substitution possibilities (*)
    • Make-or-buy opportunities (*)
    • Supplier substitution possibilities
    • Price volatility
    • Cost structure complexity
    • Environmental risks
    • Legal requirements
    • International trade risks
    • The complexity of supply network at Tier 2 and Tier 3 level

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  • Answers (1)

  • Ed Cross

    16/11/2020 03:28PM

    For the strategic importance of the spend / purchasing, you might consider the strategic impact of the customer in terms of its importance to the supplier. Some suppliers/supply markets will see certain customers as more important than others irrespective of the spend level. This could be because they see the customer as a wider opportunity in terms of sales, a thought leader or innovator they want to be associated with etc etc. It is worth thinking about how suppliers see buyers to understand better spend influence - not all decisions are rationale and number based.
    For supply market I would overtly consider tariffs/ WTO related impacts.

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