The lean and agile purchasing portfolio model (original) (raw)
Related papers
Strategic Direction through Purchasing Portfolio Management: A Case Study
The Journal of Supply Chain Management, 2002
Contrary to the growing number of academic publications in literature on purchasing portfolio models in literature, little is known about their actual use. Kraljic's 1983-model seems to be the dominant approach in the profession. This model, however, does not provide in guidelines for strategic moving commodities and/or suppliers within the matrix. Based on an in depth case study, derived from a major Dtch chemical company, the use of a portfolio techniques has been explored and described. The results indicate that Kraljic's portfolio approach, when used properly, indeed allows for sufficient guidance for developing effective purchasing and supplier strategies. Our case study points out what supplier strategies are feasible and what conditions should be met in order to make them happen. Hence, our observations from practice open up a range of new perspectives to the current thinking and use of the purchasing portfolio approach.
International Journal of Production Research, 2010
A new approach to purchasing portfolio modelling, stemming from Kraljic's matrix, for developing purchasing strategies that are aligned with competitive priorities, is developed to address the weaknesses of existing approaches that are preventing widespread application, especially in SMEs. The importance of strategic purchasing to achieving competitive priorities and the need to align it with business strategy is argued through a literature review, which is also used to establish that purchasing portfolio modelling is an effective tool in achieving this alignment. The new approach is applied to two South Korean elevator manufacturers.
Portfolio approaches to procurement
Long Range Planning, 2000
Portfolio models have been used in strategic planning and marketing, but their application to the ®eld of purchasing has been limited. This seems, however, to be changing, as procurement management has become more strategic. Applying portfolio models to purchasing can introduce a major risk in that the implications for suppliers and/or operational staff are scarcely considered. This article explores existing portfolio models in purchasing, which classify purchases into different product categories. Based on case studies of two automotive OEMs and two vehicle industry suppliers (all European), together with benchmarking interviews at Toyota, Japan, we attempt, ®rstly, to link these product categories to different types of suppliers and, secondly, to link the product categories and the supplier types to the speci®cation processÐin other words, to link the speci®cation types and the speci®cation generators. We argue that product categories must be matched by distinctive suppliers that have the required capabilities and capacities to satisfy speci®c product demands. The connection between the portfolio models and the speci®cation process will help original equipment manufacturers (OEMs) and suppliers to improve relations with each other. =
Managing the global supply base through purchasing portfolio management
Journal of Purchasing and Supply Management, 2006
It is generally agreed that 'how to source globally' has become a critical strategic decision for companies competing on a global basis. In contrast with an increased focus on global sourcing and supply chain management, little is known about problems and solutions to the actual integration and coordination of procurement across worldwide business units. Based on an in depth case study, derived from a multinational Dutch chemical company, the usefulness of a portfolio approach to the management of a global supply base has been explored. The results indicate that the Kraljic's purchasing portfolio approach allows for developing effective purchasing strategies and managing a global supply base.
International Journal of Logistics Research and Applications
Supplier segmentation is one of the most important supply chain-related activities for most firms working with multiple suppliers. Purchasing portfolio matrix (PPM) is a segmentation method that considers two dimensions (profit impact and supply risk) against which the materials purchased by the company are classified. Despite its popularity, PPM has been the subject of serious criticism. A new approach to supplier segmentation, called supplier potential matrix (SPM), aims to fulfil the need for a unifying framework that includes all the important variables under two overarching dimensions: supplier capabilities and supplier willingness. While the focus of PPM is on supply, SPM mainly focuses on relationship. However, it is important to include both the supplies and the relationship with those who supply, the suppliers. The main purpose of this study is to bring these two approaches together through a hybrid matrix called PPM-SPM. Data is collected from a company working with 70 suppliers. Best worst method (BWM), is used to determine the weights of the criteria we need for the two segmentation approaches. The suppliers are segmented based on the two approaches. A combined PPM-SPM segmentation is then proposed and discussed. The results show that the combined approach improves supplier management.
2021
Over the years, the purchasing area has taken on an essential role in the management of companies in all activity sectors. In the health sector, purchasing medicines is highly important considering the amounts involved, the impact on the service quality, and the wide variety of purchased products. This research work combined action research with a case study and aims to apply to a Central Hospital a Purchasing Portfolio Model based on the Kraljic Purchasing Matrix (KPM). The KPM allows for the classification of different classes of medicines in accordance with their impact on profits and supply risk dimensions, making it possible to define differentiated purchasing strategies. This application used the Analytical Hierarchical Process (AHP) tool for criteria prioritization and used direct measurement for criterion rating. By applying the model to a Central Hospital, this study seeks to increase the areas of applicability of purchasing portfolio models. Moreover, the results confirmed...
The aim of this paper is to describe a conceptual alignment between the certainty-customization framework (Bäckstrand, 2012) and Kraljic's purchasing matrix (Kraljic, 1983). This will enable companies that manufactures both standard and customer unique products to develop differentiated purchasing strategies for the constituent items based on the products competitive priorities and order winners. Through this distinction, different categories in the Kraljic-matrix needs to be handled differently based on the items position in regard to the customer-order-decoupling-point and its level of customization. Background The trend of outsourcing and sourcing globally has led to longer supply chains, as firms increasingly move production offshore or source from more distant locations (Christopher, 2011). A drawback from this might be that the customer order decoupling point 1 (CODP) is transferred from the manufacturer (internal) to the supplier (external) (Bäckstrand, 2012; Wikner and B...
Purchasing structures, roles, processes and strategy
European Journal of Purchasing & Supply Management, 1998
This paper addresses the issue of whether many purchasing organisations are presently attempting to operate within an inappropriate framework. Namely, are they putting structure and roles ahead of strategy and the process? To overcome the resulting problems associated with the status quo a new lean model is presented which starts with strategy development, process definition and leads on to appropriate or contingent roles, responsibilities and structures. A framework for the application of this new model is also provided in the three pillar management approach. This framework is explained in detail and rests upon three interconnected concepts, those of policy deployment, cross-functional management and supplier integration.
A project-based purchasing portfolio matrix applied to the Australian construction industry
SN Business & Economics
For a project to be delivered on-time and to an agreed cost in accordance with the specification, it is important to have an appropriate purchasing strategy. A project succeeds due to many factors, one of which is cost alongside timely delivery and quality. Formal purchasing strategies for different purchasing categories are common in the manufacturing industry, but less so in a project-based industry such as construction. The paper argues that purchasing strategies suited to the project-based nature of construction would improve project delivery and other success factors. The purpose of this study is to determine if a matrix could assist companies in the project-based industry to formulating their purchasing strategies. Case studies of five Australian construction companies’ purchasing practises were undertaken to support this work. There is evidence that, to remain competitive, it is necessary for companies to develop a network of well-established relationships with suppliers and ...
Evaluation and Application of Thesis: Developing Market Specific Supply Chain Strategies
Christopher and Towill in the article "Developing Market Specific Supply Chain Strategies" theorizes that there are three feasible pipeline designs for supply chains. In this paper, the author applies these ideas, together with related concepts regarding supply management. Based on an assigned and selected literature review; the author explains which pipeline design for supply management fits the Hewlett-Packard Company strategy for optimizing materials and product flows. Moreover, the author synthesizes relevant operational methods and issues at the Hewlett-Packard Company as well as extrapolates outcomes and opinions collected from practitioner as well as scholarly global supply chain study.