MRO Spend : BEYOND THE MATRIX
More than thirty-five years ago purchasing analyst Peter Kraljic created what is called the Kraljic Matrix, a portfolio purchasing model for companies based on a two by two matrix of risk versus profitability: (Harvard Business Review, September 1983)*Leverage items= High Profit/Low Supply Risk*Non-Critical Items=Low Profit/Low Supply Risk*Strategic items=High Profit/High Supply Risk*Bottleneck items=Low Profit/High Supply RiskKraljic defined risk as the probability for an unforeseen event to disrupt supply chain viability; profitability as the impact of a supply item upon the bottom line. Moreover, he observed that purchasing practices historically had been largely a function based on routine, a practice that was [...]