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Kraljic Matrix

What is the Kraljic Matrix?

The Kraljic Matrix is a tool used in supply chain management to analyze the purchasing portfolio of a company. It was developed by Peter Kraljic in 1983 and is based on the idea that a company's purchasing activities can be classified into four categories based on the relationship between the importance of the item being purchased and the supplier's relative power.

The four categories of the Kraljic Matrix are:

  1. Strategic items: These are items that are critical to the company's operations and for which there are few alternative suppliers. These items should be managed closely and may require a higher level of collaboration with suppliers.
  2. Leverage items: These are items that are not critical to the company's operations but for which there are few alternative suppliers. These items should be managed to maximize cost savings and negotiate favorable terms with suppliers.
  3. Bottleneck items: These are items that are critical to the company's operations but for which there are many alternative suppliers. These items should be managed to ensure a stable and reliable supply and to mitigate risk.
  4. Non-critical items: These are items that are not critical to the company's operations and for which there are many alternative suppliers. These items should be managed for efficiency and to minimize cost.

The Kraljic Matrix helps companies prioritize their purchasing activities and develop strategies for managing their relationships with suppliers. It can also help companies identify cost savings and risk management opportunities in their supply chain.


See Also

  1. Strategic Sourcing: Strategic sourcing involves analyzing and optimizing the procurement process to achieve cost savings, reduce risks, and improve supplier relationships. The Kraljic Matrix is often used as a tool within strategic sourcing initiatives to guide procurement professionals in aligning their strategies based on the characteristics of each procurement category.
  2. Supplier segmentation: Supplier segmentation refers to categorizing suppliers based on their importance and strategic value to the organization. The Kraljic Matrix helps in supplier segmentation by identifying different supplier profiles within each procurement category, enabling organizations to tailor their supplier management strategies accordingly.
  3. Supply risk management: Supply risk management involves assessing and mitigating risks associated with procuring goods or services. The Kraljic Matrix assists in supply risk management by highlighting the areas where the organization is most exposed to supply chain risks and suggesting appropriate risk mitigation strategies based on the procurement category.
  4. Cost Optimization: Cost optimization in procurement focuses on achieving the best value for money through negotiations, supplier selection, and cost reduction strategies. The Kraljic Matrix helps in cost optimization efforts by identifying procurement categories where cost reduction or negotiation tactics are likely to significantly impact overall costs.
  5. Supplier collaboration involves building strong relationships and fostering effective communication with key suppliers. The Kraljic Matrix helps in supplier collaboration efforts by identifying critical suppliers or those with a high impact on the organization's operations. It encourages organizations to engage in collaborative initiatives with these suppliers to secure supply continuity, enhance product innovation, and achieve mutual benefits.



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