Kraljic matrix

A modification of the Kraljic matrix (that is believed to be a beneficial improvement) is made by Gelderman and van Weele (2003). Here, the balance strategy is developed in greater detail (while the other two are held constant). A distinction is made between the conditions depicted at the bottom left and the top right in Fig. 5.5. If the power of both parties is equal at a low level, systems... 

The strategic importance is shown through the classiflcation of different purchasing items. These are, as already explained previously in this chapter, four different items -namely, strategic, leverage, bottleneck and noncritical items— as derived from the Kraljic matrix. The risks connected to these items can be derived from this model. Variables that impact these risks are availability, number of suppliers, competitive advantage, make-or-buy opportunities, storage risks and substitution possibihties (Kraljic 1983 Park et al. 2010). 

In this example, the supplier-buyer relationship is analyzed according to the different modules of the exemplary product Tec 1 applied in the Kraljic matrix for the private customer segment. The supplier-buyer relationship is a relevant measure to analyze the power distribution between buyer and supplier. In Fig. 5.9 one can see the different components of Tec 1 in the matrix. The noncritical items such as the screen and the keyboard indicate that here there is not a strong dependence on the supplier and a low risk for the profit impact as well as the supply risk. The screen and keyboard do not contribute to the differentiation process of the product and therefore do not have strategic importance. 

Figure 5.9 only shows the first step of the Kraljic matrix. In a second step the balance of strategic items can be assessed with the help of die purchasing matrix. 

The modified Kraljic matrix is a model that can help any firm determine how to evaluate, refine, and enhance its buying strategies and build the kind of longer-term relationships necessary to optimize supply chain management conditions. It can be modified to meet the actual needs and circumstances of any firm or market environment. When developed, it must include the participation of other functions and certainly should be worked out across business units to create the kind of consistent features that characterize leading procurement efforts. Soliciting the advice of a few friendly and trusted suppliers only improves the effectiveness of whatever matrix is implemented. 

This section deals with the role different suppliers play within a firm. In a first step, the presents of different supplier bases is evaluated. Moreover, some general questions are presented about supplier segmentation. Second, a questionnaire is presented to classify a company s AS-IS suppliers based on a purchasing portfolio matrix developed by (Kraljic 1983). 

In this context, Kraljic introduced in 1983 the purchasing portfolio matrix which groups the procured items into four categories positioned alongside the two dimensions ... 

The modules or categories identified before are now classified by their importance for the manufactured products. Based on this classification and an adequate segmentation framework, the correct number of supplier segments can be identified. Subsequently, supply strategies for each segment and the right number of suppliers have to be identified. Concrete corrective actions can be derived according to the model which is used. In the presented case the (Kraljic 1983) matrix is applied. 

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