Project Management: Kraljic Model and Sourcing Strategies Analysis

This project evaluates the Kraljic Portfolio Purchasing Model as a tool for developing sourcing strategies, focusing on the two key dimensions of supply risk and profit impact. The evaluation critiques the appropriateness of each dimension for sourcing strategy development, examining how these factors influence purchasing decisions. The project analyzes the limitations of the model, identifying any information gaps that may arise from solely using these two dimensions. It references several academic sources, including journal articles and a textbook, to support its arguments. The analysis considers the model's strengths and weaknesses, and its applicability in various business contexts, ultimately providing a comprehensive assessment of the model's utility and effectiveness in strategic sourcing.

Running head: PROJECT MANAGEMENT
Project Management
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Author Note

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Table of Contents
Evaluation about critique for the use of Kraljic’s Portfolio Purchasing Model as a tool for
developing sourcing strategy..................................................................................................2
Critique on the two dimensions (supply risk and profit impact) of Kraljic’s model.............2
Explanation of the limitations of the model and any information gaps that may result from
using only the two dimensions...............................................................................................3
References..................................................................................................................................4

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Evaluation about critique for the use of Kraljic’s Portfolio Purchasing Model as
a tool for developing sourcing strategy
According to Kraljic and his theory developed for the Portfolio Purchasing Model
developed in an article, there have been several views delivered on the portfolio purchasing
model and the view of the author on how there have been discrepancies in the purchasing
model of the organizations and how could it be improved further (Bandyopadhyay 2015). The
author has focused on the purchasing habits that the organizations have been taking as a
routine procedure. Without thinking about the prospects that work for and against the success
of the organization, the procedure keeps on within different organizations and people keep on
negotiating and purchasing. The author has also pointed out that the skills that are used for
the purchasing purposes by the people within an organization do not bother about the
economic and political disruption and utilize the age-old procedures for the purchasing
purposes as well. This is why, the author suggested a much-improved Portfolio Purchasing
Model that has the ability to generate proper procedure about the purchasing habits and has
an improved function for adding competitive advantages to the organization.
There have been other views about the different authors as well where there have been
questions raised on the utility of the Portfolio Purchasing model as suggested by Kraljic.
They have figured out the two-dimensional construct, arguing about the position of the
purchasing and the professionalism behind purchasing to identify how the Portfolio
Purchasing model can add to the overt presentation of sophistication added within an
organization (Caniels and Gelderman 2005).

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Critique on the two dimensions (supply risk and profit impact) of Kraljic’s
model
According to Kraljic (1983), there are Kraljic model consists of two different
dimensions, including the supply risk and the profit impact. According to the theories by the
author, it was found that the success factor of the entire model was based on the Supply Risk
and there was a permissible range of the supply risk. The factors that contributed to the
supply risk depended upon the vendor mix, contracts and the contractual coverage, the
availability of the scarcity materials. It was not acceptable if there was a situation where the
supply risk could increase, and the company could take any action to reduce the risk. As per
other authors, this was a supported fact as with the presence of risk in supply models,
increased risk is never acceptable for any business process.
According to Kraljic (1983), profit impact was ideated to be adhered to a supply item
and the amount or volume of the purchased supply item, total purchasing cost and percentage
as well as the product quality impacting the business growth. The purchasing approach
requires to focus on these matters to impact a better lessening for the implications on the
supply chain.
Explanation of the limitations of the model and any information gaps that may
result from using only the two dimensions
The other authors have both praised the Purchasing Model and have also criticized it.
There has been a utility of the Pareto analysis where it has been found that the model can be
described as the major advancement in case of professional purchasing with specific focus on
the diagnostic tools and the perspective tools utilized at the same time. On the other hand, the
criticism also questioned the tendency of the model to focus more on the strategies that are
not dependent on each other in any way (Johnson & Flynn 2015). It was also specified that

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the model was limited to analyse the products further if they be in a dyadic context and also
have gap in the capturing of all the characteristics of the vital buyer to supplier relationships
in case of network perspectives. Some of them have the habit of enhancing the power and
others have the potential of exploiting them.

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References
Bandyopadhyay, J.K., 2015. Basics of supply chain management. CRC Press.
Caniels, M.C. and Gelderman, C.J., 2005. Purchasing strategies in the Kraljic matrix—A
power and dependence perspective. Journal of purchasing and supply management, 11(2-3),
pp.141-155.
Johnson, P.F., & Flynn, A. E., 2015. Purchasing and supply management. 15th ed. McGraw-
Hill Higher Education.
Kraljic, P., 1983. Purchasing must become supply management, Harvard Business Review,
61 (5), pp. 109–117.