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Abstract
Kraljics purchasing portfolio approach has inspired many academics to undertake further research into purchasing portfolio models.
Rened models typically recommend one purchasing strategy for each portfolio quadrant. Yet, it has been shown that purchasers make a
clear distinction between alternative purchasing strategies within each quadrant. The fundamental assumption of portfolio models seems
to be that differences in power and dependence between buyers and suppliers exist. Still, little is known about how these concepts
inuence the choice for a specic purchasing strategy. In this paper, relative power and total interdependence for a number of
portfolio-based purchasing strategies have been quantied empirically, using data from a comprehensive survey among Dutch
purchasing professionals. The survey data largely conrmed the hypotheses that were deduced from the literature.
r 2005 Elsevier Ltd. All rights reserved.
Keywords: Purchasing portfolio matrices; Buyersupplier relationships; Power and interdependence
1. Introduction
Purchasing portfolio models have received much attention in the recent literature about professional purchasing.
One of the most famous portfolio models was introduced
by Kraljic (1983). His model has had a broad inuence on
professional purchasing (see the evidence of Kamann and
Bakker, 2004; Gelderman, 2003). It also inspired many
academic writers to undertake further research into
portfolio models (e.g. Gelderman and Van Weele, 2002,
2003, 2005; Dubois and Pedersen, 2002; Zolkiewski and
Turnbull, 2002; Nellore and Soderquist, 2000; Wynstra and
ten Pierick, 2000; Croom, 2000; Bensaou, 1999; Lilliecreutz
and Ydreskog, 1999; Olsen and Ellram, 1997; Wagner and
Johnson, 2004; Dyer et al., 1998).
According to Kraljic (1983) a rms supply strategy
depends on two factors: (1) prot impact and (2) supply
risk. Other scholars have introduced variations of the
original Kraljic matrix (e.g. Elliott-Shircore and Steele,
1985; Syson, 1992; Hadeler and Evans, 1994; Olsen and
Corresponding author. Tel.: +31 45 5762724; fax: +31 45 5762103.
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Prot
impact
High
Low
Supply risk
Low
High
Leverage items
Exploit purchasing power
Non-critical items
Ensure efcient processing
Strategic items
Form partnerships
Bottleneck items
Assure supply
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143
leverage
strategic
1
2
Profit impact
4
8
9
low
5
non-critical
bottleneck
low
high
Supply risk
Pooling of requirements
Fig. 1. Overview of purchasing strategies for all portfolio quadrants (modied from Gelderman and Van Weele, 2003, p. 212).
taking into account the suppliers dependence (e.g., ElAnsary and Stern, 1972). More recent studies have
incorporated dependence from the perspective of the buyer
as well as the supplier (Buchanan, 1992; Kumar et al.,
1995; Geyskens et al., 1996). In other words, dependence is
mutual.
Mutual dependence and power are closely related
concepts. The buyers dependence on the supplier is a
source of power for the supplier, and vice versa. A wellknown denition is that the relative power of an organization over another is the result of the net dependence of the
one on the other. If A depends on B more than B depends
on A, then B has power over A (Pfeffer, 1981). Similarly,
Bacharach and Lawler (1981, p. 65) dene relative power
as the dependence of one party compared to the
dependence of the other party. Anderson and Narus
(1990) use the term relative dependence to refer to the
difference between a rms dependence on its partner and
its partners dependence on the rm. The primary
consequence of relative dependence is indicated as power.
Buchanan (1992) conceptualized power-dependence imbalances in buyersupplier relationships as the difference in
value that buyers and sellers attach to the relationship. In
asymmetric relationships, the most independent partner
dominates the exchange. Balanced relationships refer to
domination of neither party (Buchanan, 1992). In this
respect, Kumar et al. (1995) use the term interdependence
asymmetry, which is dened as the difference between
the two partners levels of dependence. Symmetrical
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Table 2
Hypotheses on the basis of the literature with respect to relative power and total interdependence for the strategic quadrant
Purchasing strategy/scenario
Relative power
Total interdependence
3. Terminate a partnership
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Table 3
Hypotheses on the basis of the literature with respect to relative power and total interdependence for the bottleneck quadrant
Purchasing strategy/scenario
Relative power
Total interdependence
Table 4
Hypotheses on the basis of the literature with respect to relative power and total interdependence for the leverage quadrant
Purchasing strategy/scenario
Relative power
Total interdependence
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Table 5
Hypotheses on the basis of the literature with respect to relative power and total interdependence in the non-critical quadrant
Purchasing strategy/scenario
Relative power
Total interdependence
8. Pooling of requirements
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Table 6
Aspects of the construct for buyers dependence and suppliers dependence
Buyers dependence
Suppliers dependence
Logistical indispensability
Need for suppliers technological
expertise
Availability of alternative
suppliers
Switching costs buyer
Overall buyers dependence
Financial magnitude
Need for buyers technological
expertise
Availability of alternative buyers
Switching costs supplier
Overall suppliers dependence
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Table 7
Reliability analysis: Cronbachs alphas
Quadrant in the Kraljic matrix
Purchasing strategy/scenario
Construct
Buyers
dependence
Suppliers
dependence
Strategic
0.64
0.70
0.66
0.74
0.79
0.78
Bottleneck
0.61
0.63
0.76
0.69
Leverage
0.64
0.71
0.69
0.70
Non-critical
8. Pooling of requirements
9. Individual ordering
0.67
0.69
0.72
0.72
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Table 8
Power and interdependence in the matrix (n 216)
Quadrant in the
Kraljic matrix
Purchasing strategy/scenario
Buyers
dependence (1)a
Suppliers
dependence (2)a
Relative power
(1)(2)b
Total
interdependence
(1)+(2)c
Strategic
1. Maintain partnership
2. Accept locked-in relationship
3. Terminate relationship
4.03
4.01
3.70
3.31
2.68
2.72
+0.72d
+1.33d
+0.98d
7.35
6.69
6.42
Bottleneck
4. Accept dependence
5. Reduce dependence and risk
3.66
3.26
2.32
2.31
+1.34d
+0.95d
5.97
5.56
Leverage
2.41
3.14
2.68
3.08
0.27d
+0.06
5.09
6.22
Non-critical
8. Pooling of requirements
9. Individual ordering
1.90
1.94
1.97
1.79
0.07
+0.15
3.88
3.73
Suppliers and buyers dependence are measured by taking the average score on the items of each construct respectively.
Power is measured on a scale from 4 (maximum suppliers dominance) to +4 (maximum buyers dominance).
c
Total interdependence is measured on a scale from +2 (minimum interdependence) to +10 (maximum interdependence).
d
Difference between suppliers dependence and buyers dependence is signicant at po:05.
b
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Table 9
Differences with respect to relative power within the quadrants of Kraljic matrix
Quadrant in the
Kraljic matrix
Purchasing strategies
Strategic
POWER1POWER2
POWER1POWER3
POWER2POWER3
0.64a
0.27a
+0.37a
Bottleneck
POWER4POWER5
+0.38a
Leverage
Non-critical
POWER6POWER7
POWER8POWER9
0.36a
0.24a
Table 10
Differences with respect to interdependence within the quadrants of Kraljic matrix
Quadrant in the
Kraljic matrix
Purchasing strategies
Strategic
INDEP1INDEP2
INDEP1INDEP3
INDEP2INDEP3
+0.66a
+0.93a
+0.27a
Bottleneck
INDEP4INDEP5
+0.41a
Leverage
INDEP6INDEP7
1.13a
Non-critical
INDEP8INDEP9
+0.15
determine whether total interdependence differs signicantly between individual purchasing strategies within each
quadrant. The results are reported in Table 10, where
INDEPi, refers to total interdependence associated with
strategy i.
The results in Table 10 conrm our expectations. Within
the strategic quadrant total interdependence is highest
when the strategic partnership is maintained (preserve
current position), and lowest when buyers pursue a
termination of the partnership (change position). In the
bottleneck quadrant the highest level of interdependence is
associated with an acceptance of the dependence position
(preserve current position). The ndings for the leverage
quadrant suggest that total interdependence is highest
when a strategic partnership is developed (change position). For the non-critical quadrant the highest level of
interdependence is associated with the strategy in which
purchasing requirements are pooled (change position).
However, the difference between the two strategies is not
signicant. This suggests that both strategies can be
associated with a similar level of interdependence.
In general, we conclude that our empirical ndings
conrm the hitherto untested theoretical notions about
total interdependence in buyersupplier relationships.
5. Summary, conclusion and limitations
Kraljics approach has inspired many academics to
undertake further research into purchasing portfolio
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Table 11
Description of the scenarios corresponding to the purchasing strategies
Quadrant in the
Kraljic matrix
Purchasing strategy/
scenario
Scenario description
Strategic
1. Maintain a strategic
partnership
Consider a product with a high supply risk and a high nancial value. You consider the supplier as an
important partner with whom a satisfactory, cooperative strategic relationship exists. The performance
of the supplier is excellent. Both parties have an interest in continuing the relationship and the parties
have a good mutual understanding.
Consider a product with a high supply risk and a high nancial value. The relationship with the
supplier leaves much to be desired. Earlier your company was to a large extent forced to do business
with that supplier. Now, your company has to put up with the supplier and tries to make the best of the
involuntary relationship with the supplier.
Consider a product with a high supply risk and a high nancial value. It is expected that the supplier
behaves as a strategic partner. However, the relationship leaves much to be desired. Your company
feels that the behavior of he supplier cannot be controlled. It is decided to search for another supplier
with whom the company has to build up a new relationship. It is clear that this will be a difcult and
challenging task.
Consider a product with a low nancial value, but a high supply risk. Your company is vulnerable
regarding the supply of the (single) supplier. Assurance of supply is pursued by keeping high safety
stocks.
Consider a product with a low nancial value, but a high supply risk. Your company is vulnerable
regarding the supply of the (single) supplier. In response to this situation, it is decided to search for
other solutions, especially by working with more generic specications, if necessary nding another
supplier.
Consider a product with a high nancial value, but a low supply risk. Negotiations are tough in pursuit
of the lowest price, guaranteed quality and reliable delivery. Competitive bidding is an option. You are
only willing to enter short-term contracts.
Consider a product with a high nancial value, but a low supply risk. You recognize possibilities for
deepening the relationship with the supplier, allowing him to contribute more to the competitive
position of your company. It is expected that the supplier will behave as a partner and will place his
technological experience and knowledge at the service of your company.
Consider a product that has a low nancial value and a low supply risk. The product is not very critical
for your company. It is decided to buy the product as a part of a package of similar products from a
certain supplier. By pooling of requirements, a single supplier can be contracted for a package of items.
Consider a product that has a low nancial value and a low supply risk. Every time the product is
needed in the company, a single order is placed with a supplier.
2. Accept a locked-in
partnership
3. Terminate a
partnership, nd a
new supplier
Bottleneck
4. Accept dependence,
reduce the negative
consequences
5. Reduce dependence
and risk, nd other
solutions
Leverage
6. Exploit buying
power
7. Develop a strategic
partnership
Non-critical
8. Pooling of
requirements
9. Individual ordering
Table 12
Comparison of power and interdependence for purchasing strategies within each Kraljic quadrant: theory and practice
Quadrant in the
Kraljic matrix
Strategic
Bottleneck
Leverage
Non-critical
Purchasing strategy/
scenario
Relative power
Expected
Observed
Expected
Observed
Expected
Observed
1. Maintain
partnership
2. Accept locked-in
relationship
3. Terminate
relationship
Balanced
Highest
Highest
Supplier
dominance
Supplier
dominance
Supplier
dominance
Supplier
dominance
Supplier
dominance
Moderate
Moderate
Lowest
Lowest
4. Accept
dependence
5. Reduce
dependence and risk
Supplier
dominance
Supplier
dominance
Supplier
dominance
Supplier
dominance
Highest
Highest
Lowest
Lowest
6. Exploit buying
power
7. Develop a
partnership
Balanced
Balanced
Lowest
Lowest
Balanced
Balanced
Highest
Highest
8. Pooling of
requirements
Balanced
Balanced
Highest
9. Individual
ordering
Balanced
Balanced
Lowest
No
signicant
difference
No
signicant
difference
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