ABSTRACT
Dr Peter Kraljic was the first academic to bring portfolio models into the procurement arena. He developed his matrix in the early 1980s, with the aim of demonstrating how much time buyers should focus on managing different categories of expenditure within an organisation. The matrix is based on two dimensions: a simplified classification of an organisation's expenditure on goods and services in terms of the profit potential, and supply risk. Kraljic's matrix is used extensively within the procurement and supply-chain arena. It is often carried out at the planning stages when developing a sourcing strategy for either the function or individual categories of expenditure. Some academics have argued that the axis definitions need to be precise in order to collate meaningful data and that too much subjectivity can occur when application occurs. Linked to this, one sustained criticism is that this model is only based on the buyer's perspective of the purchases.
