Key Management Models, 3rd Edition

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Purchasing model (Kraljic)

The big picture

Kraljic’s (1983) purchasing model is used to determine an adequate purchasing strategy per product (or service) that optimises the trade-off between costs and risks. Appropriate guidelines can be derived from it to manage the relationships with various suppliers, by categorising supply items in a two-by-two matrix. Kraljic developed this model as an internal tool for BASF. However, the model became well known after it was published in the Harvard Business Review in 1983. The general idea of Kraljic’s purchasing model is to ‘minimise supply vulnerability and make the most of potential buying power’. ...