Kraljic grouped portfolio analysis under four categories in light of forementioned his ideas; Routine, non-critical material Low risk, purchase in low amount Product group features; Having standard qualificationsreadily available, substitutable Low added value Low amount and low profit-induced. For example; Cleaning materials, scraps, stationery, etc. Prefer suppliers that allow to purchase on line, and if possible delegate purchases, you, only control them Investigate productivity enhancing opportunities to reduce the loss of operation time before and after order process.
Normally, a company does not have one supplier; it has different suppliers for which a portfolio of relationships is needed.
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 The kraljic matrix Google Scholar Website to find the most cited approaches.
Accordingly, KraljicBensaou in addition to The kraljic matrix and Ortt will be discussed below. Each group has different supplier management strategy as shown below. 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.
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. Dawei Lu and bookboon. Evaluating the bases of supplier segmentation: A review and taxonomy.
Industrial Marketing Management, 39 4pp. How purchasing practitioners use the Kraljic matrix. Stockholm School of Economics. Open University of the Netherlands. A Critique and Update. Journal of Purchasing and Supply Management, 9pp.
International Journal of Intelligent Systems and Applications, 6 5pp. Strategic supplier- buyer relationships: Purchasing must become supply management.
Harvard Business Review, 61 5pp. Developing the concept of transparency for use in supply relationships. British Journal of Management, 15 4pp. A multi-variable approach to supplier segmentation.
International Journal of Production Research, 50 16pp. Linking supplier development to supplier segmentation using Best Worst Method.
Expert Systems with Applications, 42 23pp.Kraljic in and applied to procurement. Portfolio Analysis is now widely used Portfolio Analysis should be considered alongside the Seller’s Perception Matrix (see section ) to provide a ° view and each item can be added into the Portfolio Analysis matrix in the most relevant quadrant.
Most purchasing professionals will be familiar with purchasing portfolio analysis, using, for example, Kraljic’s Purchasing Portfolio matrix (), which plots . 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.
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.
The Kraljic Matrix facilitates the management of a company's inventory. The matrix relies on two factors when considering items needed: "Supply Risk" (level of rarity) and "Financial Risk" (cost) Items that are the hardest to attain are those that are of a high supply risk and a high financial risk;.
Developing Differentiated Negotiation Strategies: buyers can adopt appropriate negotiating behaviour, by developing differentiated negotiation strategies.