Spreading Using the Kraljic portfolio purchasing model, an organization can professionalize and improve its purchasing performance which may produce considerable cost savings. Key Points Purchasing should be part of corporate strategy.
By increasing product standardisation, much time and money can be saved. Raw materials determine to a large extent the value of the cost price of the finished product.
And, in other situations, you could bring the production of the item in-house. Strategic Positioning Classify the products or materials you identified as "strategic" in Step 1 according to the supplier and buyer power analysis you did in Step 2.
By creating buffer stock of these scarce items and by finding alternative suppliers, a company can undermine this position.
Diversify — Reduce the supply risks by seeking alternative suppliers or alternative products. A minor change in price or a change in quality will strongly affect the cost price.
Profit impact This is defined from low to high. In that case, discussions must be had with the supplier and new supply terms and conditions should be drawn up. Implement and monitor strategy This step-by-step makes it easier to control stock management. For example, in our logistics example, could you use the railroad to ship some of your overland freight instead of relying solely on trucking companies?
InPeter Kraljic created a matrix called Kraljic portfolio purchasing model that could be used to analyse the purchasing portfolio of a company. Steps in the purchasing process Peter Kraljic recommends the following steps in the entire purchasing process: Balance — Take a middle path between the exploitation approach and the diversification approach described below.
Purchasing approaches to consider here include using your full purchasing power, substituting products or suppliers, and placing high-volume orders. After reading you will understand the basics of this powerful purchasing strategy tool. In order to avoid unnecessary risks, it is important to spread the goods across the four quadrants.
What are your success factors for the good purchase strategy? There is an imbalance of power between the company and the supplier, in which the supplier is the dominant factor. Once you know this, you can select an appropriate purchasing strategy. Share your experience and knowledge in the comments box below.
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. Then mark each item in the appropriate place on the product purchasing classification matrix shown in Figure 1.
What is the Kraljic portfolio purchasing model? When agreement has been reached about the position of the products within the Kraljic portfolio purchasing model, it can be determined which actions need to be taken to achieve a better positioning.
What are the logistics costs and are there monopoly or oligopoly conditions? Kraljic recommends the following purchasing approaches for each of the four quadrants:Request PDF on ResearchGate | The Procurement Process – Refining Inputs for Kraljic Matrix Yields Objective Purchasing Portfolios and Strategies | Most of the purchasing portfolio models are.
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Application of Kraljic’s purchasing portfolio matrix in construction industry – A case study ID Table 1 Kraljic matrix and typical items purchased. Journal of Purchasing & Supply Management 11 () – Purchasing strategies in the Kraljic matrix—A power and dependence perspective Marjolein C.J.
Canie¨ls, Cees J.
Gelderman. Purchasing Must Become Supply Management.
Next the company positions the materials identified in phase 1 as strategic in the purchasing portfolio matrix (see Exhibit IV). Supply strategies.
Then mark each item in the appropriate place on the product purchasing classification matrix shown in Figure 1. Figure 1 – Product Purchasing Classification Matrix The three purchasing strategies indicated are as follows: The Kraljic Portfolio Purchasing Model helps purchasers understand where their products are classified in terms of.Download