ABSTRACT
Originated by Paul Steele and Brian Court in the mid-1990s, the model enables procurement functions to understand how a supplier might value its account with them. It suggests that from the supplier's perspective there is a correlation between the attractiveness of the buyer's account and the revenue generated, which in turn affects how the supplier will manage its account with the buyer. The horizontal axis of the matrix is represented by the relative value of business to the supplier, which serves as a measure of potential revenue. The vertical axis of the matrix represents the attractiveness of the account, which can be quantified in terms of prestige, future business and so on. The procurement function can use the outputs from the segmentation exercise to orientate resources and inform decisions in relation to category and supplier relationship-management strategies, amongst others. Peter Kraljic's focus is about profiling a category of expenditure, while supplier preferencing is about profiling a specific supplier's account-management style.
