Kraljic Model

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Acknowledgements
The thesis is part of the final examination from the master degree program of MBA in Aarhus University . The thesis work has provided me with valuable experience in working in a multi-national automotive company as well as in academic learning. First off, we would like to thank our supervisor Anders who has provided us with important input, guidance and support throughout the thesis work. He has also shown a genuine interest for the thesis resulting in good and extensive advice that contributed strongly to the quality of the report. We would also like to deeply thank all the Procurement Managers and supervisors from various companies who have provided valuable inputs and knowledge for the research. They have also contributed …show more content…

A result of the Kraljic portfolio model is that many researchers have tried to advance the model in order to make it better. No major academic breakthrough has really replaced the model, why it is still seen as relevant. Caniëls, M., Gelderman, C., (2005), However, in contrast with a growing acceptance and usage, purchasing portfolio models have become the target of severe criticism. Some argue that the complexity of business decisions does not allow for simple recommendations where as Some find the Kraljic approach counterproductive providing recommendations either to exploit power (Olsen and Ellram 1997).How could one deduce strategies from a portfolio analysis that is based on just two basic dimensions (Heege 1981; Dubois and Pedersen 2002)?. Another critique, Cox (1997) sharply condemned purchasing portfolio approach by mentioning that these portfolio model’s major weakness is that the methodology ‘‘does not provide us with any proactive thinking about what can or should be done to change the existing reality of power.’’Also, there has been not enough evidence to show up how these portfolio models effect the overall performance of the organization in terms of profit and other metrics,which this thesis looks …show more content…

Kraljic (1983); Olsen and Ellram (1997); Bensaou (1999); Gelderman and van Weele (2000) suggest that segmenting the different suppliers into manageable categories or segments allows the use of standardized work methods to be incorporated for the suppliers. Kraljic (1983) presented what is viewed as the first comprehensive model when he expanded the set of variables and included supply risk as well as profit impact and separated suppliers into four different categories in a 2x2 matrix. This model has over time been reworked and developed by several authors. Olsen and Ellram (1997) used the strategic importance and the difficulty of managing the purchase as variables for their model and both Bensaou (1999) and Gelderman and van Weele (2000) created supplier segmentation models based on power dependence between the buyer and the supplier. Kraljic (1983); Olsen and Ellram (1997); Bensaou (1999); Gelderman and van Weele (2000) suggests that segmenting the different suppliers into manageable categories or segments allows the use of standardized work methods to be incorporated for the

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