Kraljic matrix simplified essay

Retrieved [insert date] from ToolsHero: Strategic items high profit impact, high supply risk. Supply risk is high when the item is a scarce raw material, when its availability could be affected by government instability or natural disasters, when delivery logistics are difficult and could easily be disrupted, or when there are few suppliers.

For department, business unit or entire corporation? Purchasing approaches to consider here include using your full purchasing power, substituting products or suppliers, and placing high-volume orders.

Usage of the Kraljic Matrix. Purchasing must become supply management. Leverage Items are products that represent a high percentage of the profit of the buyer and there are many suppliers available.

More information Dubois, A. In the balance of power between the company and the supplier, the company is the dominant factor.

Kraljic Portfolio Purchasing Model

Purchase Classification Start by classifying all of the commodities, components, products, and services that you buy according to the supply risk and potential profit impact of each.

What are the logistics costs and are there monopoly or oligopoly conditions? Analyze and discuss the results. Journal of purchasing and supply management, 9 5 Bottleneck Items These are items that have a low financial impact on our organization, however, there is a high supply risk.

To do this, simply enter each item in the purchasing portfolio matrix, shown in Figure 2, below. Bottleneck Items are products that that can only be acquired from one supplier or their delivery is otherwise unreliable and have a relative low impact on the financial results.

Outsourcing of Non-critical Items and Leverage Items. 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 itself. Harvard business review61 5kraljic’s portfolio Matrix Figure 1.

Each of the four categories of commodities in the KPM requires a different approach to suppliers. High.

Kraljic Matrix

Leverage items • Standard, substitutable • Alternate suppliers • High volume or cost: Strategic items • Strategically important. Feb 28,  · The Kraljic Matrix is one of the most effective ways to deliver accurate supplier segmentation. Although the Kraljic Matrix may appear simple to many procurement professionals, it is often.

Stockholm School of Economics Department of Marketing and Strategy Master Thesis forth period How purchasing practitioners use the Kraljic matrix. 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).

1 Classify me!: A Kraljic Portfolio Matrix Exercise Author: Jeremy Liew Ger Yao University of Twente P.O.

The Kraljic Portfolio Purchasing Model

BoxAE Enschede The Netherlands. The Kraljic Matrix for Procurement Powerful Purchasing Procurement is an important process for a business or a company that focuses on providing the right quality and quantity of products to people.

Kraljic matrix simplified essay
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