Flevy Management Insights Q&A

How to build a Kraljic Matrix in Excel?

     Joseph Robinson    |    Supply Chain Management


This article provides a detailed response to: How to build a Kraljic Matrix in Excel? For a comprehensive understanding of Supply Chain Management, we also include relevant case studies for further reading and links to Supply Chain Management best practice resources.

TLDR Build a Kraljic Matrix in Excel by setting up a grid, collecting data, plotting items, and developing tailored procurement strategies for each quadrant.

Reading time: 5 minutes

Before we begin, let's review some important management concepts, as they relate to this question.

What does Procurement Strategy mean?
What does Kraljic Matrix mean?
What does Cross-Functional Collaboration mean?
What does Dynamic Adaptation mean?


Creating a Kraljic Matrix in Excel is a strategic move for any organization looking to optimize its procurement strategy. This framework, developed by Peter Kraljic in a 1983 Harvard Business Review article, has been a cornerstone for consulting firms advising on supply chain management. Its purpose is to help organizations categorize their purchasing portfolio into four quadrants—strategic, leverage, bottleneck, and non-critical—based on two dimensions: supply risk and the importance of purchasing. This categorization enables organizations to develop tailored strategies for different types of purchases, from securing critical supplies to minimizing costs and risks.

The first step in how to create a Kraljic Matrix in Excel involves setting up the framework. Start by opening a new Excel spreadsheet and creating a two-dimensional grid. Label one axis "Supply Risk" and the other "Importance of Purchasing." Supply Risk assesses the complexity of the market and the scarcity of the supply base, while Importance of Purchasing evaluates the impact of the purchase on the organization's financial performance and operational capabilities. These axes are typically graded on a scale from low to high. Next, divide the grid into four quadrants and label them: Strategic, Leverage, Bottleneck, and Non-critical. This template serves as the foundation for your matrix.

Once the framework is established, the next phase involves data collection and analysis. Organizations need to evaluate each item or supplier against the two dimensions. This can be a complex process, requiring data on supplier reliability, market volatility, spend analysis, and the criticality of each item to the organization's operations. Tools like weighted scoring models can be useful here, assigning scores to different criteria and calculating an overall score for each dimension. Input these scores into your Excel spreadsheet, plotting each item or supplier on the grid based on their scores. The position of each point within the matrix highlights its categorization and informs the procurement strategy.

The final step in leveraging the Kraljic Matrix is strategy development. Each quadrant of the matrix suggests a different procurement strategy. For items in the Strategic quadrant, organizations might focus on building strong relationships with suppliers, investing in joint development projects, or exploring alternative materials. For Leverage items, the strategy could involve bulk purchasing to achieve cost savings or using competitive bidding to ensure the best price. Bottleneck items might require strategies to reduce dependency through inventory management or finding alternative suppliers. Non-critical items often lead to a focus on process efficiency, such as automating orders to reduce administrative costs. Document these strategies in your Excel spreadsheet, linking each item or supplier with a tailored action plan.

Real-World Examples and Best Practices

In practice, leading organizations leverage the Kraljic Matrix to navigate supply chain challenges and enhance procurement efficiency. For instance, a global manufacturing company might use the matrix to identify critical components that are at high risk of supply disruption and develop strategies to secure alternative sources or invest in supplier capacity building. This proactive approach can mitigate risks and ensure continuity of operations.

Consulting firms often advise on best practices for implementing the Kraljic Matrix effectively. One key recommendation is to continuously update the matrix to reflect changes in the market environment and the organization's strategic priorities. This dynamic approach ensures that procurement strategies remain aligned with current risks and opportunities. Additionally, integrating the Kraljic Matrix with other supply chain management tools, such as demand forecasting and supplier performance management, can provide a more comprehensive view of procurement risks and opportunities.

Another best practice is to engage cross-functional teams in the development and implementation of the Kraljic Matrix. This collaborative approach ensures that different perspectives are considered, from finance and operations to research and development, enhancing the accuracy of the categorization and the effectiveness of the resulting strategies. By fostering a culture of collaboration and strategic thinking, organizations can maximize the benefits of the Kraljic Matrix and drive procurement excellence.

Are you familiar with Flevy? We are you shortcut to immediate value.
Flevy provides business best practices—the same as those produced by top-tier consulting firms and used by Fortune 100 companies. Our best practice business frameworks, financial models, and templates are of the same caliber as those produced by top-tier management consulting firms, like McKinsey, BCG, Bain, Deloitte, and Accenture. Most were developed by seasoned executives and consultants with 20+ years of experience.

Trusted by over 10,000+ Client Organizations
Since 2012, we have provided best practices to over 10,000 businesses and organizations of all sizes, from startups and small businesses to the Fortune 100, in over 130 countries.
AT&T GE Cisco Intel IBM Coke Dell Toyota HP Nike Samsung Microsoft Astrazeneca JP Morgan KPMG Walgreens Walmart 3M Kaiser Oracle SAP Google E&Y Volvo Bosch Merck Fedex Shell Amgen Eli Lilly Roche AIG Abbott Amazon PwC T-Mobile Broadcom Bayer Pearson Titleist ConEd Pfizer NTT Data Schwab

Conclusion

In conclusion, creating a Kraljic Matrix in Excel is a strategic exercise that requires careful planning, data analysis, and strategy development. By categorizing purchases based on supply risk and importance, organizations can tailor their procurement strategies to manage risks, optimize costs, and ensure supply continuity. Real-world examples and best practices highlight the value of this framework in enhancing procurement efficiency and resilience. As organizations face increasingly complex supply chain challenges, the Kraljic Matrix remains a powerful tool for strategic procurement management.

Best Practices in Supply Chain Management

Here are best practices relevant to Supply Chain Management from the Flevy Marketplace. View all our Supply Chain Management materials here.

Did you know?
The average daily rate of a McKinsey consultant is $6,625 (not including expenses). The average price of a Flevy document is $65.

Explore all of our best practices in: Supply Chain Management

Supply Chain Management Case Studies

For a practical understanding of Supply Chain Management, take a look at these case studies.

Strategic Procurement for Heavy and Civil Engineering Construction Firm

Scenario: A mid-size heavy and civil engineering construction firm in the U.S.

Read Full Case Study

End-to-End Supply Chain Efficiency Assessment for Global Electronics Manufacturer

Scenario: A global electronics manufacturing organization, having a significant market share in North America and Europe, is facing challenges with the end-to-end visibility of its supply chain operations.

Read Full Case Study

Supply Chain Resilience and Efficiency Initiative for Global FMCG Corporation

Scenario: A multinational FMCG company has observed dwindling profit margins over the last two years.

Read Full Case Study

Supply Chain Optimization for Leading Semiconductor Manufacturer

Scenario: A leading semiconductor manufacturer is facing significant challenges in supply chain management, impacting its ability to meet the growing global demand.

Read Full Case Study

Telecom Supply Chain Efficiency Study in Competitive Market

Scenario: The organization in question operates within the highly competitive telecom industry, facing challenges in managing its complex supply chain.

Read Full Case Study

Inventory Management Enhancement for Luxury Retailer in Competitive Market

Scenario: The organization in question operates within the luxury retail sector, facing inventory misalignment with market demand.

Read Full Case Study


Explore all Flevy Management Case Studies

FREE DOWNLOAD
Receive our FREE Primer on Change Management

This deck explains a "practical" approach to Change Management, as developed by Ron Leeman, winner of the Change Leader award by the HRD Congress in 2012.

Download this Free Presentation

Related Questions

Here are our additional questions you may be interested in.

What is the role of transportation in supply chain management?
Transportation in Supply Chain Management ensures efficient goods movement, cost savings, customer satisfaction, and sustainability through strategic planning, technology, and collaboration. [Read full explanation]
How do geopolitical tensions impact global supply chains, and what strategies can mitigate these risks?
Geopolitical tensions disrupt global supply chains by increasing costs and causing delays; strategies like Diversification, Digital Transformation, and Strategic Planning can mitigate these risks. [Read full explanation]
How can organizations leverage big data and analytics for more accurate demand forecasting and inventory management in their supply chains?
Leverage Big Data and Analytics to revolutionize Supply Chain Management, enhancing Demand Forecasting and Inventory Management for operational efficiency and competitive advantage. [Read full explanation]
How is the Internet of Things (IoT) transforming Supply Chain management practices?
IoT is revolutionizing Supply Chain Management by enhancing visibility, improving operational efficiency, fostering proactive decision-making, and driving innovation for Operational Excellence. [Read full explanation]
What role does customer feedback play in shaping supply chain strategies?
Customer feedback is crucial for Strategic Planning, driving Innovation, enhancing Operational Excellence, and ensuring Continuous Improvement in supply chain strategies for competitive advantage. [Read full explanation]
How are companies leveraging machine learning to optimize inventory management and demand forecasting?
Companies are leveraging Machine Learning to significantly enhance Inventory Management and Demand Forecasting, achieving greater accuracy, efficiency, and agility, thereby reducing costs and improving market responsiveness. [Read full explanation]

 
Joseph Robinson, New York

Operational Excellence, Management Consulting

This Q&A article was reviewed by Joseph Robinson. Joseph is the VP of Strategy at Flevy with expertise in Corporate Strategy and Operational Excellence. Prior to Flevy, Joseph worked at the Boston Consulting Group. He also has an MBA from MIT Sloan.

It is licensed under CC BY 4.0. You're free to share and adapt with attribution. To cite this article, please use:

Source: "How to build a Kraljic Matrix in Excel?," Flevy Management Insights, Joseph Robinson, 2025




Flevy is the world's largest knowledge base of best practices.


Leverage the Experience of Experts.

Find documents of the same caliber as those used by top-tier consulting firms, like McKinsey, BCG, Bain, Deloitte, Accenture.

Download Immediately and Use.

Our PowerPoint presentations, Excel workbooks, and Word documents are completely customizable, including rebrandable.

Save Time, Effort, and Money.

Save yourself and your employees countless hours. Use that time to work on more value-added and fulfilling activities.




Read Customer Testimonials

 
"One of the great discoveries that I have made for my business is the Flevy library of training materials.

As a Lean Transformation Expert, I am always making presentations to clients on a variety of topics: Training, Transformation, Total Productive Maintenance, Culture, Coaching, Tools, Leadership Behavior, etc. Flevy "

– Ed Kemmerling, Senior Lean Transformation Expert at PMG
 
"As an Independent Management Consultant, I find Flevy to add great value as a source of best practices, templates and information on new trends. Flevy has matured and the quality and quantity of the library is excellent. Lastly the price charged is reasonable, creating a win-win value for "

– Jim Schoen, Principal at FRC Group
 
"As a consulting firm, we had been creating subject matter training materials for our people and found the excellent materials on Flevy, which saved us 100's of hours of re-creating what already exists on the Flevy materials we purchased."

– Michael Evans, Managing Director at Newport LLC
 
"I have used Flevy services for a number of years and have never, ever been disappointed. As a matter of fact, David and his team continue, time after time, to impress me with their willingness to assist and in the real sense of the word. I have concluded in fact "

– Roberto Pelliccia, Senior Executive in International Hospitality
 
"My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today’s market. They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me "

– Bill Branson, Founder at Strategic Business Architects
 
"Last Sunday morning, I was diligently working on an important presentation for a client and found myself in need of additional content and suitable templates for various types of graphics. Flevy.com proved to be a treasure trove for both content and design at a reasonable price, considering the time I "

– M. E., Chief Commercial Officer, International Logistics Service Provider
 
"Flevy.com has proven to be an invaluable resource library to our Independent Management Consultancy, supporting and enabling us to better serve our enterprise clients.

The value derived from our [FlevyPro] subscription in terms of the business it has helped to gain far exceeds the investment made, making a subscription a no-brainer for any growing consultancy – or in-house strategy team."

– Dean Carlton, Chief Transformation Officer, Global Village Transformations Pty Ltd.
 
"Flevy is now a part of my business routine. I visit Flevy at least 3 times each month.

Flevy has become my preferred learning source, because what it provides is practical, current, and useful in this era where the business world is being rewritten.

In today's environment where there are so "

– Omar Hernán Montes Parra, CEO at Quantum SFE



Receive our FREE Primer on Change Management

This deck explains a "practical" approach to Change Management, as developed by Ron Leeman, winner of the Change Leader award by the HRD Congress in 2012.