Kraljic’s Purchasing Portfolio and Supplier Evaluation in International Purchasing and Supply Management

Abstract

The purpose of this thesis is to show how buying company’s competitiveness can be increased in current international business through developing purchasing and supply management (PSM) in practical level of the case company. Development aspects focus on both in-house PSM capabilities and knowledge, and to better control of external resources derived from suppliers. Hence, the issues and theories involved in the study are related to competitiveness, PSM, purchasing performance, Kraljic’s purchasing portfolio analysis and supplier evaluation and selection process development.

The empirical part in the thesis concentrates firstly on the benefits derived from the Kraljic’s approach when implemented in case company’s business unit by the study author. Second aspect is to find how the supplier evaluation and selection system can be more comprehensively designed in order to control and evaluate suppliers and their products according to required expectations of criteria and their priorities in different product quadrants in the Kraljic’s matrix. Both these aspects are combined in one model where the goal is to increase buying company’s competitiveness through PSM.

As one result in the study, the Kraljic’s approach was successfully designed and implemented for the use of the case company’s business unit. Major benefits from the utilisation of Kraljic’s approach were achieved and PSM was seen to develop greatly in the company’s business unit since supplier evaluation and selection systems could be also designed to meet current requirements in international PSM according to the implemented approach. The made AHP questionnaire in the study suggests that there are major differences in criteria and their priorities in supplier evaluation and selection within different quadrants in the matrix. Hence, there are differences also on how the supplier evaluation and selection process should be actually implemented in practice within the quadrants and changes should be therefore made for the process currently existing in the case business unit in order to increase its competitiveness through PSM.