Typically, most companies will have a significant number of suppliers, often numbered in hundreds and sometimes in thousands. Clearly it would not be possible to establish close relationships with them all and neither is it necessary. What is required is some means of categorising suppliers so that different management strategies can be adopted for each category. This is the idea of supplier segmentation.
One of the earliest frameworks for grouping suppliers was that developed by Kraljic.1 What has come to be known as the ‘Kraljic Matrix’ sorts vendors according to the products they supply. A simplified version of the matrix is shown in Figure 9.1 below.
Figure 9.1 The Kraljic Matrix
The two dimensions of the ...
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