Examples of the 4 Product Categories of Kraljic

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Examples of the 4 Product Categories of Kraljic
Retselisitsoe Tsolo, Manager, Lesotho

I don't manage to draw up a clear difference between the 4 categories of product. I am operating in the milling industry. We buy raw materials, packing materials, spares and stationery. Which is which? Thanks for your input...

Examples of 4 Product Categories
Walter Hugo Coronel, Business Consultant, Argentina
As examples vary from one industry to another and from one market to another, this is something that has to be done inside the company taking into account your strategic drivers.
Take for example one typical purchasing category: uniforms
- For a company with 20 back office employees in a city with hundreds options to buy a simple uniform this is a non critical category.
- In the same market for a company with 3000 employees, and it´s a leverage category.
- For a retail company, which sells “special branded uniform” made by a supplier with a patented technology for this uniform fabrics, with a contract to sell only thorough this reseller (this means that if the reseller is successful they are both successful and vice versa). This is a strategic category
- For a nuclear plant, uniform providers are scarce, maybe only one, which has no special interest in providing more or better, here you have a typical bottleneck, where the supplier will provide you with what they sell, not with what you need or desire.

Examples of Product Categories
Jose Blauw, Manager, Netherlands
- If you can easily switch between several suppliers, bargain serious on price without large impacts to your processes: here you have LEVERAGE suppliers.
- If you can easily switch between suppliers, but negotiation on price brings little or no impact: here you have NON CRITICAL suppliers. You want them to bother you as less as possible.
- If you can not easily switch between suppliers, and negotiations on price do not make any sense as there is hardly price impact, but just a few (or one) suppliers are able to deliver the necesary goods or services: these a BOTTLENECK items. Try to shift these items to the non-critical items
- If you can not easily switch between suppliers as there is just one (or very few) suitable supplier(s) and large impacts on money, knowledge or processes are involved upon a change of supplier: here you have your STRATEGIC suppliers. Long time cooperation and alignment of the supply chain between you and him is recommended to maximize mutual benefits.

4 Product Categories
Koen Vandermarliere, Business Consultant, Belgium
Hi, It is impossible for me to explain how your categories shoult fit in the product categories without an analysis.
Basically what you need to ask yourself for each category is:
1. What is the annual value of this category Is it high or low?
2. How critical is this category for my company?
Taking your examples;
1. Raw Materials are fundamentally your core business, so I suppose it is the highest spend.
2. Depending on how many suppliers there are for these raw materials you will plot it on the "criticality" axis. Gold and diamonds will probably be more critical then seawater. As the supply may be more difficult.
1. Should be a relatively low spend versus the total spend.
2. In most cities there are a lot of suppliers that can provide you with stationary, and although you might not be able to print an inoice, it will not totally stop your business. So the criticality is low.
Does this help? .


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Koen Vandermarliere
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