What help supply management personnel develop an appropriate sourcing strategy foritems purchased, based on profit impact and supply risk?

The question describes the Kraljic Matrix, a foundational tool in strategic sourcing. This model is a type of purchasing portfolio matrix that segments an organization's purchased items into four categories based on two key dimensions: profit impact and supply risk. By plotting items on this two-by-two grid, supply managers can identify them as strategic, leverage, bottleneck, or non-critical. This classification directly informs the development of tailored sourcing strategies for each category, optimizing resource allocation and mitigating risks. The term "Two-by-Two portfolio matrix" accurately describes this strategic framework.

A. Two-by-Two Indexing matrix: This is a generic term. While the Kraljic model is a two-by-two matrix, "portfolio matrix" is the more precise and standard term for this specific strategic application in supply management.

B. Bilateral alternative matrix: This is not a recognized term in supply management literature for a sourcing strategy tool based on profit impact and supply risk.

D. Mutual commodity-based matrix: This is not a standard term for this strategic model. The Kraljic matrix applies to all purchased items, not just commodities, and is based on risk/profit, not "mutual" criteria.

1. Kraljic

P. (1983). Purchasing must become supply management. Harvard Business Review

61(5)

109–117. This seminal article introduces the portfolio matrix based on profit impact and supply risk.

2. Gelderman

C. J.

& Van Weele

A. J. (2005). Purchasing portfolio models: A critique and an update. Journal of Supply Chain Management

41(3)

19-28. This academic review analyzes and discusses the Kraljic model as a primary example of a purchasing portfolio model. (https://onlinelibrary.wiley.com/doi/abs/10.1111/j.1745-493X.2005.04103003.x)

3. Monczka

R. M.

Handfield

R. B.

Giunipero

L. C.

& Patterson

J. L. (2016). Purchasing and Supply Chain Management (6th ed.). Cengage Learning. Chapter 7

"Supplier Evaluation and Selection

" details the use of portfolio analysis

specifically the Kraljic matrix

for developing sourcing strategies.