The
kraljic’s portfolio matrix is used to classify corporate purchases which
differentiate by financial importance and supply risk. It can be divided into
non-critical, bottleneck, leverage, and strategic. Each of them is different
by the financial importance and also supply risk.
First
the non-critical was the categories that have low financial importance and
low supply risk. This type of item brings low impact to the financial or profit
and most of it was saturated in the supply which meant it was able to buy and
obtain at most of the supplier. For example, the furniture.
Second
the bottleneck has a higher supply risk but low financial importance. This
means that this type of item brings a low impact on profit but it was limited in
supply which meant it was hard to obtain and procure. Usually, businesses will
try to find multiple suppliers for the bottleneck item. For example, the RAM
inside the computer.
Third
was the leverage. It has high financial importance but with a lower supply risk
which means leverage items may bring higher profit and it is easier to find the
supply. However, it is also easier to obtain in most of the suppliers or
places. For example, the chemical product.
Last was the strategic item. It has high supply risk but also with high financial importance which is able to bring high profit but actually in low and unstable supply. For example, the smartphone chipset.
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