Strategic Direction through Purchasing Portfolio Management: A Case Study

^{Authors: 1}Cees J. Gelderman | ¹Arjan J. van Weele

Open University of the Netherlands | Eindhoven University of Technology

E-mail: kees.gelderman@ou.nl | Email: aweele@euronet.nl

Abstract

Contrary to the growing number of academic publications in literature on purchasing portfolio models in literature, little is known about their actual use. Kraljic’s 1983-model seems to be the dominant approach in the profession. This model, however, does not provide in guidelines for strategic moving commodities and/or suppliers within the matrix. Based on an in depth case study, derived from a major Dtch chemical company, the use of a portfolio techniques has been explored and described. The results indicate that Kraljic’s portfolio approach, when used properly, indeed allows for sufficient guidance for developing effective purchasing and supplier strategies. Our case study points out what supplier strategies are feasible and what conditions should be met in order to make them happen. Hence, our observations from practice open up a range of new perspectives to the current thinking and use of the purchasing portfolio approach.

Keywords: Strategic Direction, Purchasing Portfolio Management

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