When a company seeks a strategic supplier, the crucial first step is to choose the right sourcing model, which will make or break the relationship. Unfortunately, many organizations are not operating with sourcing strategies: they are anchored in buying strategies developed more than 30 years ago.
In a landmark 1983 article in the Harvard Business Review, Peter Kraljic introduced a purchasing portfolio model using a 2 x 2 matrix. The Kraljic model was based on the premise that purchased products and services can vary significantly in terms of importance and risk. Based on this, procurement professionals should use different sourcing and supplier management strategies depending on the importance and risk profile of each purchase.