What is the purpose of using the Kraljic matrix in procurement?

The Kraljic matrix is a strategic tool in procurement that helps organizations manage their supply base by categorizing their purchases based on two critical dimensions: profit impact and supply risk. The primary purpose of the matrix is to analyze and categorize different supplier relationships and the products sourced, which aids in determining how much attention and resources need to be allocated to managing these suppliers.

By focusing on the impact on profit and supply risk, the Kraljic matrix enables organizations to develop tailored procurement strategies for different categories of products or services. It identifies strategic items that could significantly affect the organization's profitability and evaluates the risks associated with their supply, allowing procurement professionals to make informed decisions that align their procurement strategies with overall business objectives. This approach helps mitigate risks, maximize supplier value, and ensure a more efficient procurement process.