Aligning purchasing portfolio strategies with customer-supplier relationships

Abstract

The use of purchasing portfolios in strategic purchasing has been discussed largely since the introduction of the first model by Kraljic in 1983. Some studies suggest it to be the most used analysis tool in the purchasing function regardless of its shortcomings in theory and practice. The application of the model gives also implications to the management of supplier relationships. This paper aims to describe how the case firm aligns its purchasing portfolio and supplier relationship strategies. Furthermore, there has been explored the internal and external impediments to the planning and implementation of the related supply strategy.

In this case study, Kraljic (1983) model is used for analyzing products and the level of customer-supplier integration is analyzed with Vesalainen (2002) model. The data consists of 20 products and suppliers. The findings of the analyses enable the alignment of the models and provide varied strategic recommendations for product and supplier relationship management. Barriers to strategic purchasing (Keough 1993) and effective supply chain management (Fawcett et al. 2008) are applied as theoretical background in the exploration of impediments to the product and supplier relationship strategy alignment process.