The Kraljic Matrix helps us develop a purchasing strategy for the products and services our organization consumes. It aims to remove supply vulnerability as. 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. The Purchasing Portfolio Matrix [Kraljic ] Rys. 2. Key words: Purchasing, Kraljic-matrix, purchasing strategies, new concepts based on.
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Kraljic suggested that purchasing in many companies is based on routine, transactional activities that afford little strategic consideration to potential economic and political disruptions to materials supplies. When agreement rkaljic been reached about the position of the products within the Kraljic portfolio purchasing model, it can be determined which actions need to jraljic taken to achieve a better katrix.
By creating buffer stock of these scarce items and by finding alternative suppliers, a company can undermine this position. This prevents obsolescent stock and excess supplies and this leads to cost reduction. The Kraljic Matrix helps us develop a purchasing strategy for the products and services our organization consumes. What do you think? What is the right supply chain for your product?
It represents ‘supply risk’ horizontal axis and ‘profit impact’ vertical axis and offers four product classification quadrants Caniels and Gelderman, It does this by helping us determine, on a per product or per supplier basis, the type of relationship we should be fostering with each of our suppliers.
Secondly, we need to develop plans to reduce our dependence on this supplier, by adapting our products and investigating alternative products and kralic. Using the Kraljic portfolio purchasing model, an organization can professionalize and improve its purchasing performance which may produce considerable cost savings. Although these products are low impact and have an abundant supply, they are nevertheless interesting, because the cost of handling them can often outweigh the cost of the product matrlx.
Firstly, we need to ensure continuity of supply. Mintzberg Managerial Roles December 29, An example might be where we have a new supplier supplying a new technology.
There are only two ways to make money: The idea of supplier segmentation is pretty simple – grouping suppliers in a supply base by their impact on the business Rogers, A minor change in price or a change in quality will strongly affect the cost price. The purchasing strategy we would typically use for these types of items is twofold.
The Kraljic Matrix allows us to work in a smarter way with those suppliers we already have. This article explains the kraljic portfolio purchasing model in a practical way.
Kraljic Matrix – The Chartered Institute of Procurement and Supply
The result is that purchasing professionals can prioritize buying activities based on profit impact and level of risks involved.
This is defined from low to high. Share Tweet Share Share Pin. A supplier should not have the upper hand nor have power over an organization. Kraljic Portfolio Purchasing Model4.
World Customs Journal, 1 2 There is a balance of power between the company and the supplier. This enables us to see which relationships are important so we can focus on strengthing these, as well as identifying less important relationships where we might employ traditional supplier management techniques such as offshoring.
Please enter your comment! The International Journal of Logistics Management, 17 2 Thriving in a turbulent world: Peter Kraljic distinguishes four types of product categories in these two dimensions:. Precondition is that each product or product group can be placed into the matrix.
In that case, discussions must be had with the supplier and new supply terms and conditions should be drawn up.
Kraljic Portfolio Purchasing Model
There may be a balance of power between the company and the supplier, but when this supplier ceases to deliver, purchasing stagnates. Did you find this article interesting? These are products that are essential for the production process but they are difficult to obtain. How you then actually manage those suppliers is up to you.
This will be a function of our past dealings with the supplier and their size. Strategic Items These items have a large financial impact on our organization. Newer Post Older Post Home.
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These are items that have a low financial impact on our organization and are also in abundant supply, such as office supplies. Such products represent a low value and they can be purchased in different varieties and from kralic suppliers.
These are items that have a low financial impact on our organization, however, there is a high supply risk. Your rating is more than welcome or share this article via Social media!
The Kraljic Matrix | How to Optimize Purchasing Costs and Risks
Just like strategic items, these items have a large financial impact on our organization, however, the item is in abundant supply. These items are iraljic scarce.
These items have a large financial impact on our organization. It is used to create a purchasing portfolio by segmenting items products or services into 4 dimensions. To what extent is supply complex; is there abundance or scarcity?
This matrix helps a company gain an insight into the working methods of the purchasing department and how they spend their time on various products.
Harvard Business Review, 3,