Kraljic Portfolio Purchasing Model remains resourceful in the analysis of the purchasing portfolio of a company. The matrix offers powerful insights to a corporation into the working methods of the purchasing department and the manner in which they spend their time on various products ( Montgomery, Ogden & Boehmke, 2018, p . 28). Further, it offers amicable guidance on the kind of articles that can be subcontracted and as such do not have to be re-ordered and the risks involved in specific articles. Kraljic’s Portfolio Purchasing Model is still relevant today in a globalized economy for a number of reasons.
Through the model, a company can professionalize and improve its performance on purchases that may yield considerable savings on costs. The business can avoid unnecessary risks by spreading the goods across the four quadrants ( Ferreira, Arantes & Kharlamov, 2015, p. 77) . A product can only be placed in a single bracket in one of the quadrants. The model is instrumental in deciding the actions that can be taken to attain a better positioning of the product.
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Purchasing needs to be part of the cooperate strategy. As such, it is significant for the purchasers to know the way on how to evaluate risks and maximize profits by crafting the correct approach to procurement. Kraljic’s Portfolio Purchasing Model assists the purchasers to understand where the products are classified with regards to profit contribution and supply risk ( Montgomery, Ogden & Boehmke, 2018, p . 88). It is also resourceful in knowing whether the balance of power lies squarely with the supplies or with them. Once this is known, an appropriate purchasing strategy can be selected.
It can be summarized that Kraljic’s Portfolio Purchasing Model is a simple insight into the buyer community on how to manage their resources in a more intelligent fashion. Even though the argument was made in 1883, it remains relevant in corporate purchasing as ever.
BIBLIOGRAPHY
Montgomery, R.T., Ogden, J.A. and Boehmke, B.C., 2018. A quantified Kraljic portfolio matrix: using decision analysis for strategic purchasing. Journal of Purchasing and Supply Management , 24 (3), pp.192-203.
Ferreira, L.M.D., Arantes, A. and Kharlamov, A.A., 2015. Development of a purchasing portfolio model for the construction industry: an empirical study. Production Planning & Control , 26 (5), pp.377-392.
