What is procurement portfolio analysis?

What is procurement portfolio analysis?

Portfolio analysis is a tool to structure and segment the supply base, and is used as a means of classifying suppliers into one of four types. The objective is to categorise every procurement or family of procurements into one of four categories: critical, routine, leverage and bottleneck.

What are the portfolio analysis techniques?

Methods For Portfolio Analysis BCG Growth-Share Matrix. Hofer’s Product-Market Evolution Matrix. GE Multifactor Portfolio Matrix. Market Life Cycle-Competitive Strength Matrix.

What is Kraljic Matrix in procurement?

The Kraljic Matrix is a strategic tool used by procurement and supply chain professionals to identify and minimise supply risks. Using the tool to classify the importance of suppliers’ products and services can highlight supply chain weaknesses, support strategy development and minimise supply disruption.

What are the four 4 key quadrants in the Kraljic Matrix?

Kraljic Matrix is divided into 4 quadrants showing the profit impact on one axis and supply risk on the other side of the axis. The matrix four quadrants are: Strategic, Leverage, Bottleneck and Non-Critical.

How is a portfolio analysis used in procurement?

Portfolio Analysis is now widely used in identifying optimal strategies for category sourcing at global, regional or local levels, based on an assessment of two of the most critical factors affecting a supply market: sourcing complexity or risk spend impact relative to the buying organisation’s\otal\ spend.

What’s the purpose of the Kraljic portfolio purchasing model?

Its purpose is to help purchasers maximize supply security and reduce costs, by making the most of their purchasing power. In doing so, procurement moves from being a transactional activity to a strategic activity – because, as Kraljic said, “purchasing must become supply management.”.

How to select strategic suppliers using portfolio analysis?

These sources provide a compelling case, still valid today, for Procurement to place particular focus on the circumstances and outlook of the supplier. One of the ways of doing this is by account portfolio analysis from the supplier’s perspective.

How to classify products in a purchasing portfolio?

Classify the products or materials you identified as “strategic” in Step 1 according to the supplier and buyer power analysis you did in Step 2. To do this, simply enter each item in the purchasing portfolio matrix, shown in figure 2, below.