Factors to analyse a purchasing portfolio beyond those in the. Another criticism made of kraljics portfolio approach is that it does not take into account the suppliers perspective. Kraljica matrix, the kraljic portfolio purchasing model. Hence, an increased understanding will be obtained in the differentiation of purchasing strategies of different products. You can use it to increase your buying power, improve reliability of supply, and, ultimately, maximize your profits.
Access the latest live webinars and on demand recordings. Based on theory derived from academic articles and books, students in groups of 34 wrote one chapter for the overall course book with the joint ambition to describe and discuss the state of the art of strategic purchasing today. Now in its third edition, the cips global standard for procurement and supply is a comprehensive competency framework. It became amazingly popular almost immediately after it was announced and named a procurement breakthrough. Exploring the portfolio approach in purchasing and supply.
An unrivalled hub of thought leadership and expertise from leading organisations working with the supply and procurement profession. The famous and well known portfolio model of peter kraljic will be used as starting position but the core will be to. The purpose is to investigate how the kraljic model 1983 can be applied in an industrialized housing factory. A portfolio approach to the development of differentiated purchasing strategies citation for published version apa. Strategic direction through purchasing portfolio management. Positioning of commodities using the kraljic portfolio matrix.
Kraljics work is, therefore, seen to lack a proper. Since its inception, the kraljic portfolio matrix kpm has been widely used as a diagnostic and prescriptive purchasing tool. One of the most famous portfolio models was introduced by kraljic 1983. Kamann, 2007, kraljic s kpm approach has become the dominant methodology built upon in literature and the foundation for purchasing strategies for many. A portfolio approach to the development of differentiated. Vlerick sales center article summary series purchasing. His ideas appear in some form in the portfolio models developed and discussed by many other authors.
Tweaking the kraljic model august 2, 2011 by kate vitasek leave a comment more than 25 years ago peter kraljic published his seminal portfolio purchasing model, which has been both a widely critiqued and widely accepted method for assessing procurement demand, risk and profit factors for supply chains. His 2x2 matrix is set out to provide companies with a way to distinguish between different types of purchasing strategies which. Kraljic 1983 made a reasonable case for the usefulness of the portfolio approach by describing the experiences of four large industrial companies. Although other models have been developed, kraljics kpm approach has become the dominant methodology built upon in literature and the foundation for purchasing strategies for many organizations. Factors to analyse a purchasing portfolio beyond those in the kraljic model. How purchasing practitioners use the kraljic matrix. It aims to remove supply vulnerability as much as possible and maximize our potential buying power. Others include the pmms supply positioning model and the market management matrix which is a combination of both supply positioning and supplier preferencing models.
Dubois andcoordinating the sourcing patterns of fairly. In summary, kraljics 1983 model and similar portfolio models still applies from a sustainabiity perspective but the two dimensions of the model need to. A portfolio approach to the development of differentiated purchasing strategies. The purchasing portfolio model is a four step model aiming at examining how to exploit purchasing power for the purchased items based on two factors. Although the kraljic matrix may appear simple to many procurement professionals, it is often. The kraljic portfolio supply chain procurement free. Jun 22, 2005 handling measurement issues and strategic directions in kraljic s purchasing portfolio model, journal of purchasing and supply management, 9. The kraljic matrix is one of the most effective ways to deliver accurate supplier segmentation.
Kharlamov department of management, economics and industrial engineering, university of aveiro, campus of santiago, 3810193 aveiro. Handling measurement issues and strategic directions in kraljics purchasing portfolio model, journal of purchasing and supply management, 9. The kraljic portfolio purchasing model neurologist. In it, he demolishes pretty thoroughly many of the ideas put forward by kraljic purchasing portfolio analysis and the famous kraljic matrix and the aspects of michael porters five forces analysis that have relevance to procurement and supply chain matters. This system measures and classifies your suppliers on max. The august, 2005 journal of supply chain management reported a study, the results of which revealed that the position and the professionalism of purchasing are both positively related to the greater use of purchasing portfolio models. In this article, i would be looking at the advantages and disadvantages of peter kraljics approach with regards to defining purchasing activity and managing relationships. The kraljic purchasing portfolio approach kraljic 1983 introduced the first comprehensive portfolio approach for the determination of a set of differentiated purchasing strategies.
Portfolio approaches to improving procurement and supply. Factors to analyse a purchasing portfolio beyond those in. Nov 08, 2012 an introduction to peter kraljic s portfolio analysis. Kraljics purchasing portfolio model aims at developing differentiated purchasing and supplier strategies through classifying commodities on the basis of two dimensions. The kraljic portfolio purchasing model helps you do this. The kraljic matrix helps us develop a purchasing strategy for the products and services our organization consumes. He has also created the portfolio purchasing model 1983, which is a model tool to analyse the purchasing portfolio of a company. A purchasing portfolio approach to supplier relationship. Kraljic portfolio purchasing model, a purchase strategy. Purchasing strategies in the kraljic matrixa power and. Kraljic 1983 introduced the first comprehensive portfolio approach for purchasing and supply management gelderman and van weele, 2003. After reading you will understand the basics of this powerful purchasing strategy tool.
Jan 19, 2016 in summary, kraljics 1983 model and similar portfolio models still applies from a sustainabiity perspective but the two dimensions of the model need to be adapted to include not only. Application of kraljics purchasing portfolio matrix in. The kraljic model can be used to analyze the purchasing portfolio of a company and thus support decisions and actions regarding the purchase of raw materials and products. The kraljic portfolio purchasing model the kraljic. Kraljic 1983 introduced the first comprehensive portfolio approach for purchasing and supply management. One of the primary weaknesses of the kpm is the qualitative nature of the model, which results in a subjective method for weighting and positioning suppliers or commodities in the various quadrants. Other case studies indicated that a purchasing portfolio model is a powerful tool for. This matrix plots company buying strength against the strength of the supply market. Kraljic 1983 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.
The first news on the kraljic matrix appeared in 1983 and was published by kraljic himself. Purchasing portfolio models have received much attention in the recent literature about professional purchasing. The matrix developed by peter kraljic can be used to implement differentiated purchasing strategies gelderman. In 1983, peter kraljic created a matrix called kraljic portfolio purchasing model that could be used to analyse the purchasing portfolio of a company.
The kraljic portfolio purchasing model helps you think about purchasing more strategically. A purchasing portfolio approach to supplier relationship management at volvo car group it master of science thesis in the master degree programme, supply chain management nicklas folk eric runeson hellgren department of technology management and economics division of industrial marketing chalmers university of technology gothenburg. Costvalue portfolio model raf verheyden, october 2001 cost model value model t burden non critical leverage bottleneck risk low high h w price down cost down cost out product x risk e h w low high conscious tactical dilemma strategic value up. Kharlamov department of management, economics and industrial engineering, university of aveiro, campus of santiago, 3810193 aveiro, portugal email. Until today the kraljic matrix is considered as the basic tool for cost categorization in companies. In the years following the kraljic matrixs introduction using a purchasing portfolio model became widespread. Although the kraljic matrix may appear simple to many procurement professionals, it is often inaccurately applied and this leads to misfiring supplier relationship management programs. The models clear strength is that it relatively simple leads us to a useful procurement strategy. The kraljic matrix how to optimize purchasing costs and risks. How purchasing practitioners use the kraljic matrix a relative comparative case study with four big swedish industrial manufacturing companies many manufacturing companies spend more than half o was the kraljic 1983 comprehensive portfolio appr that the supplier side is disregarded.
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, 2006. Celem macierzy kraljic a jest pomoc nabywcom w maksymalizacji bezpieczenstwa dostaw i obnizeniu kosztow. The company positions the materials identified as strategic in phase 1 in the purchasing portfolio matrix. Before entering kraljic portfolio analysis, we need to consider supplier relationships. Kraljic 1983 suggested that all commodities and all buyersupplier relationships are not to be managed in the same way. Additional procurement factors beyond kraljic jose blauw, manager, netherlands, member consider the qltc methodology, also known as value sourcing, developed in the hitech industry asml. He has also created the portfolio purchasing model 1983, which is a model tool to analyse the purchasing portfolio of a company biography peter kraljic. In essence, the article focused on purchasing as an important managerial area with a huge impact on profit. This rather dreary title hides an interesting and useful framework. This article explains the kraljic portfolio purchasing model in a practical way. Dear all, as written in the, if we need to analyze our purchasing portfolio, we can use this model to help us consider 2 interrelated factors which are crucial in drafting a purchasing strategy. Its purpose is to help purchasers maximize supply security and reduce costs, by making the most of their purchasing power.
Kraljics purchasing portfolio approach has inspired many academics to undertake further research into purchasing portfolio models. The aim of this essay discuss and critique of the role of purchasing in the global supply chain, an outline and discuss of three factors, such as, environment, technological, and practice, outline the advantages and disadvantages, discussion, and critical kraljic portfolio matrix and cox model relationship needed to changes, discuss the human. Gelderman is associate professor of marketing and purchasing management at the open university of the netherlands in the netherlands. The general idea is to minimize supply risk and make the most of buying power kraljic, 1983. Refined models typically recommend one purchasing strategy for. An introduction to peter kraljics portfolio analysis.
Until today the kraljic matrix is considered as the basic tool for. Kraljic s purchasing portfolio approach has inspired many academics to undertake further research into purchasing portfolio models. The first portfolio model for purchasing was introduced by kraljic 1983 as an important management instrument, when the strategic importance of purchasing became obvious and purchasing was in need of. The famous and well known portfolio model of peter kraljic will be used as starting position but the core will be to show current developments to turn this model into a strategic tool for. Fram och baksida rgb chalmers publication library cpl. Mar 11, 2014 the kraljic portfolio purchasing model helps you think about purchasing more strategically. Moving to team decisions, international journal of purchasing and materials management. Feb 28, 2017 the kraljic matrix is one of the most effective ways to deliver accurate supplier segmentation. Profit impact supply risk but what other factors can be relevant. Usually a company will find itself in different roles with respect to different items and. A purchasing portfolio approach to supplier relationship management at volvo car group it master of science thesis in the master degree programme, supply chain management nicklas folk eric runeson hellgren department of technology management and economics division of industrial marketing chalmers university of technology gothenburg, sweden, 20. Despite its age, its a popular and useful model used in companies worldwide. 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.
Macierz kraljic a, model portfolio zakupow petera kraljica, zarzadzanie zakupami, optymalizacja zakupow, szkolenia. The purchasing portfolio matrix plots company buying strength against the strengths of the supply market and can be used to develop counterstrategies visavis key suppliersan approach. The kraljic model can be used to analyze the purchasing portfolio of a firm and to support corresponding decisions and actions regarding purchasing of commodities, products or a company. In this work, cox aims to develop a whole new segmentation and positioning methodology for sourcing.