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Analysis of tactical sourcing levers and their implementation in relation to the Kraljic matrix in the chemical industry

Stoffers, L. (2019) Analysis of tactical sourcing levers and their implementation in relation to the Kraljic matrix in the chemical industry.

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Abstract:In the 1970s Peter Kraljic introduced a portfolio approach to professionalize the sourcing strategy process at firms. Based on the profit impact and supply risk of purchasing items, it differentiates purchasing items in terms of complexity and importance of the purchasing items and thereby allows matching purchasing strategies and resources accordingly. Building on previous research on the usage of sourcing levers in relation to the Kraljic matrix in the automotive industry, this study replicates this approach in the chemical industry. This study aims to identify differences in the application of tactical sourcing levers as defined by Hesping and Schiele (2016a) in relation to the quadrants of the Kraljic matrix and differences in the implementation of sourcing measures in general. Within the direct sourcing department of a chemical firm in Germany, 60 sourcing categories are selected and analysed based on stratified sampling. Category strategies are reviewed for planned sourcing measures and followed up in semi-structured interviews to facilitate a thorough understanding of measures and the current implementation status. The Kruskal-Walis H and Mann-Whitney U test were applied to test for significant differences or similarities among the four Kraljic portfolio quadrants. This study has four major findings that shed doubt on the usefulness of the Kraljic portfolio approach in practice. First, there are either no general trends regarding the usage of sourcing levers in the different quadrants of the Kraljic matrix or they differ per industry or company. Second, levers that do show significant differences among the portfolio quadrants are extension of supply base and optimization of supplier relationships that relate to the width of the supply base and depth of relationships. Other levers show no significant differences. This might indicate that the generic strategic recommendations according to Kraljic and other scholars have to be re-evaluated. The Kraljic classification might give some inspiration or direction, but eventually category managers seem to consider other contingency factors. In fact, sourcing strategies are multi-faceted and use different levers in addition to each other. Third, there are no overall differences in implementation success of measures among the Kraljic matrix. However, pairwise comparisons show strategic categories have a significantly higher implementation rate than non-critical and leverage categories. Finally, differences might be explained by two category factors that show differences in the implementation rate. Those are higher spend and strategic alignment with internal stakeholders. If products are relevant to internal and external stakeholders or strategies are well aligned internally, category strategies are more likely to be implemented.
Item Type:Essay (Master)
Faculty:BMS: Behavioural, Management and Social Sciences
Subject:85 business administration, organizational science
Programme:Business Administration MSc (60644)
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