This framework is developed by a team of former McKinsey and Big 4 consultants. The presentation follows the headline-body-bumper slide format used by global consulting firms.
Download the Kraljic Matrix PPTX to analyze procurement strategies and supplier positioning. Get a ready-to-use template for effective supply risk and profit impact assessment. Kraljic Matrix is a 29-slide PPT PowerPoint presentation slide deck (PPTX) available for immediate download upon purchase.
The Purchasing function in most organizations deserves more attention than it is given.
Most executives associated with Procurement lack the competencies and perspectives required to identify gaps and effectively manage the function. This paucity of attention and incompetence is a certain path to extinction in this age of abrupt supply and demand shifts, intense competition, raw materials and resources running down, and political turmoil.
There are 2 key factors critical for devising a robust Supply Strategy:
1. Strategic importance of Purchasing – This factor measures the ratio of raw material costs to total costs, their impact on profitability, and the value addition done by the entire product portfolio.
2. Complexity of the Supply Chain – This factor measures the sophistication level of the Supply Chain in terms of supply insufficiency, technological disruption, barriers to entry, distribution costs, and dominance of market players.
What's needed in this era is an inclusive, long-term Purchasing and Supply Management Strategy. The Kraljic Matrix presents an objective methodology to identify supply bottlenecks, threats, and flaws.
This presentation provides a detailed overview of the Kraljic Matrix, a framework to assist in categorizing and analyzing an organization's Purchasing function, critical to inform its Procurement Strategy. The Kraljic Matrix is a strategic tool designed to help companies optimize their Procurement and Supply Chain decisions by categorizing products based on their importance and supply market complexities.
Developed by Peter Kraljic in the 1980s, the matrix classifies products into 4 distinct categories. Each category suggests different Procurement Strategies to manage risks and leverage opportunities.
By understanding where a product falls within the matrix, buyers can better navigate challenges such as abrupt technology disruptions, economic instability, and changing regulatory and environmental contexts, ultimately ensuring supply continuity and maximizing value. This methodical approach aids organizations in building more resilient and efficient Supply Chains.
Implementation of the Kraljic Matrix involves a 4-stage process:
1. Purchasing Portfolio Classification
2. Market Analysis
3. Positioning of Strategic Items
4. The Action Plan
This presentation also discusses each of these stages in depth.
This PowerPoint presentation on Kraljic Matrix also includes some slide templates for you to use in your own business presentations.
The Kraljic Matrix is a structured approach for supply chain management, consisting of 4 essential stages. The first stage, Purchasing Portfolio Classification, organizes procurement items like raw materials and components, assessing their impact on profitability and supply chain risks. The second stage, Market Analysis, evaluates the supplier market based on criteria necessary for acquiring materials, crucial for understanding market dynamics and identifying potential suppliers. The third stage, Positioning of Strategic Items, determines the strategic importance of purchases based on market analysis insights, prioritizing items for strategic sourcing. The final stage, The Action Plan, evaluates bottlenecks, identifies improvement areas, and selects sourcing strategies to optimize the procurement portfolio. This matrix guides organizations in enhancing procurement strategies and improving supply chain resilience.
The Kraljic Matrix is a strategic procurement tool that classifies purchases based on profit impact and risk/complexity. It features 4 categories:
1. Leveraged Purchases (high profit impact, low risk) involve multiple suppliers, enabling cost reduction and value maximization through effective supplier management.
2. Strategic Purchases (high profit impact, high risk) are critical for success and require strong supplier relationships to mitigate risks and ensure supply continuity.
3. Non-critical Purchases (low profit impact, low risk) can be procured easily and should focus on streamlining processes to reduce administrative costs.
4. Bottleneck Purchases (high risk, low profit impact) have limited suppliers, necessitating risk management strategies to secure supply and avoid disruptions.
The Kraljic Matrix aids organizations in categorizing procurement items for informed decision-making and resource allocation.
The Kraljic Purchasing Matrix categorizes purchases into Leveraged Purchases and Non-critical Purchases. Leveraged Purchases significantly impact operations and are easy to procure, allowing organizations to enhance their position through multiple suppliers, better negotiations, and alternative options. This strategic procurement emphasizes supplier relationships and negotiation tactics. Non-critical Purchases have minimal operational effects, are low-risk, and readily available, exemplified by office supplies. Their straightforward procurement process enables organizations to manage these purchases with less complexity. Strategies for Non-critical Purchases include streamlining procurement, product rationalization, and decentralized purchasing, focusing on efficiency and cost management. Each purchasing category requires distinct procurement strategies to optimize purchasing aligned with operational needs.
Organizations must optimize purchasing strategies for long-term supply security and short-term gains. A thorough examination of supply scenarios is essential, defining associated risks, costs, returns, and strategic implications. Developing a preferred supply option requires leadership approval and specific goals. When suppliers hold more power, consolidating purchases with a single supplier can effectively manage costs, even if it means accepting higher prices to meet volume requirements. Conversely, if the organization has a stronger position, diversifying sources can leverage multiple suppliers for better pricing opportunities, reduce inventory levels, and enhance purchasing strategies. In-house production may also mitigate risks associated with reliance on a single supplier. These insights are vital for enhancing procurement strategies and achieving cost savings.
This framework is developed by a team of former McKinsey and Big 4 consultants. The presentation follows the headline-body-bumper slide format used by global consulting firms.
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