Handling measurement issues and strategic directions in Kraljic's purchasing portfolio model

Management dilemmas in innovative supplier networks

“…Typically, decisions over the types of relationships depend on the frequency and specificity of the capabilities and resources that the suppliers provide the company, so that the higher the value generated for the company, the closer the relationship with the supplier (Gadde et al, 2010;Williamson, 1985). Kraljic (1983) was the first to propose portfolio models into the purchasing relationships and it is still considered as the dominant approach in partner relationship management (Gelderman et al, 2003;Kahkonen, 2011;Viio and Grönroos, 2014;Ateş et al, 2015). Kraljic's approach is to optimise the dyadic relationships with suppliers by taking into account the capabilities of suppliers and the related risks.…”

“…His matrix defines four types of purchases: non-critical (low risk, low impact), bottleneck (high risk, low impact), leverage (low risk, high impact), and strategic (high risk, high impact). It should be noted that several researchers point out that as the portfolios concern only dyadic relationships, the approach fails to cover more varied relations and interdependencies within supplier network (Dubois & Pedersen, 2002), nor does it consider suppliers' side of the buyer-seller relationship or explicitly take into account the possible strategies and reactions of suppliers (Gelderman & Van Weele, 2003). Moreover critique claims that portfolio approach is less suitable in context where the suppliers are taking part in product developing.…”

“…Kraljic, 1983) efficient to manage their supply chains (Viio and Grönroos, 2014;Gelderman et al, 2003) in terms of reducing vulnerability and maximizing purchasing power on suppliers. As implied by the previous findings, a supplier network with several co-operating and at the same time competing partners would call for other ways of governing the services and innovation development.…”

Cruise ship suppliers: A field study of the supplier relationship characteristics in a service supply chain

“…The two aforementioned options represent to the extreme end of the spectrum where multiple forms of combinations between the antagonist and the collaborative model may exist (Dyer et al, 1998;Gelderman & Van Weele, 2003;Olsen, 1997;Rezaei & Ortt, 2012). Naturally, some of these options are better suited to one firm or another depending on the market structure governing the respective sectors.…”

“…More than 30 years ago Kraljic (1983) already suggested that a matrix was necessary to separate purchases from organizations into different categories of products, each with its own unique strategy adapted to the given category purchased (Gelderman & Van Weele, 2003) and incidentally expanding this to also include a coherent alignment between the relation strategy and the product category (Lindgreen, Vanhamme, Van Raaij, & Johnston, 2013;Wagner & Boutellier, 2002). Hence, a first criterion to discriminate the supplier relations is the importance of the product being bought whether it is the actual monetary cost, and its strategic or overall importance to the final customer (Kraljic, 1983;Rezaei & Ortt, 2012).…”