The kraljic matrix

Procurement good practice Tags: Like others, I found the recent discussion here and here on Kraljic fascinating.

The kraljic matrix

Normally, a company does not have one supplier; it has different suppliers for which a portfolio of relationships is needed.

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An enormous amount of scholars developed models and frameworks for such a purpose. For example Jubert presented 15 appraches, Day et al. The scope of this post is to examine the most famous approaches and frameworks, therefore, these lists where checked against Google Scholar Website to find the most cited approaches.

Accordingly, KraljicBensaou in addition to Rezaei and Ortt will be discussed below. Each group has different supplier management strategy as shown below.

The kraljic matrix

The model has many advantages, yet it has been criticized too. Masella and Rangone One level of that dimension was strategic integration, which refers to arrangements that involve, for example, joint development of new product and technology. Level of investment means how much each of the partners contributes to the success of this partnership; either by tangible items such as materials and buildings or non-tangible items such as trust and knowledge Bensaou ; Day et al.

Accordingly, he proposed three contextual factors related to product, market and supplier in order to help the managers to select the best relationship Bensaou The final result is a portfolio of relationships as shown in the same figure. Firstly, they are not comprehensive and were developed based on different set of segmentation criteria.

Accordingly, the models recommend different strategies which might create a confusion; Secondly, these models are only applicable for selecting the suppliers when initiating the purchasing act for the first time; however, they do not address the other types of supplier-buyer transactions that will happen over the time.

However, the model has been criticized because it does not provide weight for each segmentation criteria which will result in grouping suppliers in the same category although they have different performance under each of the criteria Haghighi et al. Accordingly, Haghighi et al. This new model is shown below.

Secondly, selection criteria are weighted to determine the optimum pair of the best and the worst selection criteria as shown in the below figure. As a conclusion, each model has advantages and limitations Geldermanhowever, managers should always remember that there is no standard blueprint that can be used when implementing them, and a mix of critical thinking skills is needed when developing the final recommendations Akman Accordingly, he developed a new five- green segmentation criteria which are: Evaluating suppliers to include green supplier development programs via fuzzy c-means and VIKOR methods.

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Computers and Industrial Engineering, 86, pp. Portfolios of buyer-supplier relationships. Sloan Management Review VO — 40, 40 4pp. Fundamentals of Supply Chain Management [e-book], Dr.kraljic_matrix | Plots each product or service in the Kraljic purchasing matrix based on the attribute value score of x and y.

Kraljic Matrix Definition. The Kraljic matrix is an influential strategic tool "to guide managers so that they can recognise the weakness of their organisation and formulate strategies for guarding against supplies disruption" (Lysons and Farrington, 63). The result is a traditional 2 x 2 matrix the creates quadrants that position a supplier and define a company's strategic approach to that supplier (Kraljic later made enhancements to the model, including a 3 x 3 version, and there have been many refinements of this by others over the years). similar to the Kraljic matrix in that they use practically the same dimensions and categories, and suggest some of the same recommendations (Appendix A). Thus, it is fair to conclude that the Kraljic matrix has become the standard in the field of purchasing portfolio models.

get_frontier | Identifies and extracts the observations that have the Pareto optimal combination of x and y. The Kraljic Matrix categorized purchased items into the quadrants of model–strategic, leverage, non-critical, or bottleneck–and recommended a different strategy for each category.

Kraljic's Portfolio Matrix a technique used by many mangers to classify corporate purchases in terms of their importance and supply complexity with a goal of minimizing supply vulnerability and getting the most out of the firm's purchasing power.

Kraljic Matrix Definition. The Kraljic matrix is an influential strategic tool "to guide managers so that they can recognise the weakness of their organisation and formulate strategies for guarding against supplies disruption" (Lysons and Farrington, 63). The Kraljic matrix has been largely used in many different industries like automobile, manufacturing, construction, oil and gas, etc., as an efficient tool for developing differentiated purchasing strategies. This paper describes the application of Kraljic matrix on a large construction industry multinational group, identifying the necessary adaptations of the tool. Adjusting Kraljic tool for construction industry required specific key-factor selection, then AHP technique for factor prioritization.

Kraljic Matrix, also known as Purchasing Portfolio Matrix or Supply Chain Portfolio Matrix, is a method developed by Peter Kraljic in It is used to create a purchasing portfolio by segmenting items (products or services) into 4 dimensions.

Kraljic matrix model is developed by the Peter Kraljic in his article "Purchasing Must Become Supply Management".

Kraljic Portfolio Analysis Sample Application

He explains that supply strategy of firm is based on . matrix are to be pursued through the implementation of a recommended purchasing strategy (Gelderman, ). The general strategic recommendations, as provided by Kraljic, should be elaborated and tailored in.

The Kraljic Matrix | How to Optimize Purchasing Costs and Risks