KRALJIC MATRIX PDF

The Kraljic Matrix helps us develop a purchasing strategy for the products and services our organization consumes. It aims to remove supply vulnerability as. Kraljic Matrix, also known as Purchasing Portfolio Matrix or Supply Chain Portfolio Matrix, is a method developed by Peter Kraljic in It is used to create a. The Purchasing Portfolio Matrix [Kraljic ] Rys. 2. Key words: Purchasing, Kraljic-matrix, purchasing strategies, new concepts based on.

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This article explains the kraljic portfolio purchasing model in a practical way. After reading you will understand the basics of this powerful purchasing strategy tool.

InPeter Kraljic created a matrix called Kraljic portfolio purchasing model that could be used to analyse the purchasing portfolio of a company. 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.

This is defined from low to high. What krraljic the strategic importance of the purchase of certain materials?

Kraljic Matrix

Supply risk This is also defined from high to low. To what extent is supply complex; is there abundance or scarcity? To kraaljic extent are the materials up-to-date and have the latest technology and materials substitutions been used?

What are the logistics costs and are there monopoly or oligopoly conditions? Peter Kraljic distinguishes four types of product categories in these two dimensions:. These types of products are purchased from one supplier.

There may be a balance of power between the company and the supplier, but when this supplier ceases to deliver, purchasing stagnates. In general, raw materials belong to this category. Raw materials determine to a large extent the value of the cost price of the finished product.

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These items do not represent a high value but they are a vulnerable factor in the entire supply chain. These are products that are essential for the production process but they are difficult to obtain. There is an imbalance of power between the company and the supplier, in which the supplier is the dominant factor. By creating buffer stock of these scarce items and by finding alternative suppliers, a company can undermine this position.

A minor change in price or a change in quality will strongly affect the cost price. In the balance of power between the company and the supplier, the company is the dominant factor.

What is Kraljic Matrix or Supply Chain Portfolio Matrix?

By concluding good framework agreements and drawing up targeted pricing, the relationship between the company and the supplier continues to be in harmony. These types of products cause the least problems with respect to purchasing performance.

Such products represent a low value and they can be purchased in different varieties and from different suppliers. Most raw materials and substances fall into this category. There is a balance of power between the company and the supplier. By increasing product standardisation, much time and money can be saved. Peter Kraljic recommends the following steps in the entire purchasing process:. This step-by-step makes it easier to control stock management.

This prevents obsolescent stock and excess supplies and this leads to cost reduction. Using the Kraljic portfolio purchasing model, an organization can professionalize and improve its purchasing performance which may produce considerable cost savings.

In order to avoid unnecessary risks, it is important to spread the goods across the four quadrants. A supplier should not have the upper hand nor have power over an organization. Precondition is that each kraljci or product group can be placed into the matrix.

Preferably, a product is placed only in one of the quadrants. 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.

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The purchasing strategy can be prepared for each part of the Kraljic portfolio purchasing model.

Subsequently, it can be concluded whether a product is in the right quadrant or whether it would be better to move it to another quadrant. In that case, discussions must be had with the supplier and new supply terms and conditions should be drawn up.

What do you think? Do you recognize the practical explanation or do you have more suggestions? What are your success factors for the good purchase strategy? If you liked this article, then please subscribe to our Free Newsletter for the latest posts on Management models and methods.

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