What is the Kraljic matrix used for?

What is the Kraljic matrix used for?

The Kraljic Matrix is a strategic tool used by procurement and supply chain professionals to identify and minimise supply risks. Using the tool to classify the importance of suppliers’ products and services can highlight supply chain weaknesses, support strategy development and minimise supply disruption.

What is a leverage item?

Definition: Leverage Items are products that represent a high percentage of the profit of the buyer and there are many suppliers available.

How do you perform a Kraljic Matrix?

Let’s explore each in more detail.

1. Step 1: 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.
2. Step 2: Market Analysis.
3. Step 3: Strategic Positioning.
4. Step 4: Action Plans.

What is the Kraljic matrix Forbes?

The Kraljic Matrix is one of the most effective ways to deliver accurate supplier segmentation. In 1983, Peter Kraljic devised a means to segment the supplier base in the article in HBR. In this, he argued that supply items should be mapped against two key dimensions: risk and profitability.

What are bottleneck items?

Bottleneck products/services are items that represent a relative limited value in terms of money but they are vulnerable with regard to their supply. Often bottleneck products/services can only be obtained from one supplier.

What are the examples of leverage products?

Leveraged products usually have an underlying, namely different asset classes such as stocks or bonds, physical products, currency or commodities. Examples of leveraged products are options, futures, FX, Forex, FX options, CFD and certain ETFs or certificates.

What are examples of strategic items?

Strategic Items These are critical products for a company, and are the key focus for the Procurement team. There is high risk against supply, and a high impact on cost. For example, the Qualcomm chipsets for mobile phones.

What is portfolio analysis in supply chain management?

Portfolio analysis is a tool to structure and segment the supply base, and is used as a means of classifying suppliers into one of four types. The objective is to categorise every procurement or family of procurements into one of four categories: critical, routine, leverage and bottleneck.

What is Kraljic portfolio matrix?

The Kraljic matrix is a method for classifying and analysing the purchasing portfolio in order to guide the procurement strategy of companies. It is a tool for managing item categories for a company in relation to the market.