Evaluate the applicability of Kraljic’s Portfolio Purchasing Model to organisational sourcing strategy.
Preview and Objectives
Preview
One of the fundamental roles of purchasing is to ensure goods and services are procured from the most appropriate suppliers. This process is called sourcing and covers a range of activities that are performed by buyers including locating suppliers, ensuring the quality and completive pricing of products and securing a beneficial purchasing agreement. An objective of sourcing is to enter into purchasing agreements which maximise commercial outcomes while minimising risk and contributing to organisations’ broader business objectives. Sourcing therefore is the cornerstone activity of purchasing as the decisions made in this stage in the procurement cycle has downstream implications on the rest of the supply chain.
Not all purchases are the same and the sourcing strategy for each category of spend will be determined by many factors including commercial opportunities, product availability, volumes purchased, the number of suppliers, corporate objectives and risk. To aid buying organisations in developing appropriate sourcing strategies, segmentation models (sometimes called portfolio models) have been developed in the purchasing field. This week we explore the fundamental principles that underpin sourcing activity and the role of purchasing in driving buyer-seller performance. We will critically analyse the use of segmentation models in directing sourcing approaches.
Learning objectives-
Upon completion of this week, students will have achieved the following objectives:
Evaluate Kraljic’s Portfolio Purchasing Model.
Analyse the applicability of Kraljic’s Portfolio Purchasing Model to organisational sourcing strategy.
