Portfolio analysis & spend

6 important questions on Portfolio analysis & spend

What are the 2 variables of Kraljic's product portfolio?

1. Purchasing impact on the bottom line: the profit impact of a given supply item measured against criteria such as cost of materials, total costs, volume purchased
2. Supply risk: measured against criteria such as short-term and long-term availability, number of potential suppliers, structre of supply markets

What are the strategic choices based on Kraljic's portfolio?

-Leverage: exploit purchasing power
-Strategic: exploit power, diversity, balance
-Bottlenecks: volume insurance
-Routine: efficient processing

What is the goal of leverage?

Reduce direct purchasing costs
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What is the goal of strategic?

-Increase supplier performance
-find substitue products or accept high prices
-develop long-term relation

What is the goal of routine?

Reduce order costs and material handling

What is the goal of bottlenecks?

Secure essential supplies

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