ABSTRACT
Supplier Categorisation is a technique most associated with supplier relationship management (SRM). Many large organisations with significant spend have commenced SRM activities only to find that they fail to yield the benefits purported by consultants. The Supplier Categorisation model helps organisations to segment their supply-base and identify key suppliers that could be targeted for SRM. These relationships should be only the highest value/highest risk relationships where there is a degree of criticality in the relationship that justifies the added investment of SRM. The model is based on limited parameters and characterised solely by the buyer’s perspective of the relationship, rather than a two-way shared understanding of the relationship dynamics. The Supplier Categorisation model fails to account for the structures of power within supply chain relationships. Using this as a SRM segmentation tool assumes that high spends and high risk relationships will automatically create relationships of shared inter-dependency.
