Question

Comment the following statement: “An understanding of Kraljic Matrix, improves the understanding of the top management and the senior purchasing executives and can lead to appropriate buyer- supplier relationships and contracts”.

Answer 1

Kraljic Matrix:

In procurement concept Kraljic Matrix is a way of analysing the procurement portfolio to guide organization in the procurement process. Its main objective is to weigh various purchasing strategies both internally and externally and help organization adapt the best purchasing strategy.

The statement provided is true due to below reasons:

1. This model uses four important steps which are purchase classification, market analysis, strategic position and action planning. These tools help purchasers to have maximised supply security with reduced cost and thereby making the most of their purchasing power. This in turn creates the good relationship between the buyers and suppliers.

2. This purchase classification tool has a matrix which contains strategic, bottleneck and non-critical and leverage items with supply risk and profit impact. This matrix is quietly friendly for purchase executive managers and the top management.

3. Decision can be quickly made as a team which improves their understanding of the top management and the senior purchasing executives.

4. In order to analyse the power of suppliers and the buying power of the organization market analysis step help come up with strategic factors which will in turn build buyer supplier relationship.