Kraljic Matrix: the Basics and Example

Article by: Patty Mulder

Last update: December 2, 2025

Kraljic Matrix: this article explains the Kraljic Matrix als know as the Kraljic Portfolio Purchasing Model, developed by Peter Kraljic in a practical way. Next to what it is, the product categories, the steps in the purchasing process and the spreading. After reading you will understand the basics of this purchasing strategy tool. Enjoy reading!

What is Kraljic Matrix?

In 1983, Peter Kraljic created a matrix called Kraljic portfolio purchasing model that could be used to analyse the purchasing portfolio of a company.

This matrix helps a company gain an insight into the working methods of the purchasing department and how they spend their time on various products. The Kraljic Matrix also makes clear which articles can be subcontracted and therefore do not have to be ordered again and which articles involve a particular risk.

Dimensions of the Kraljic Matrix

This model is based on two dimensions by which the purchased materials and/or products can be classified.

Profit impact

This is defined from low to high. What is the strategic importance of the purchase of certain materials? What added value do they deliver in the production line and what effect do the costs of these materials have on the company’s profitability?

Supply risk

This is also defined from high to low. To what extent is supply complex; is there abundance or scarcity? To what extent are the materials up-to-date and have the latest technology and materials substitutions been used? What are the logistics costs and are there monopoly or oligopoly conditions?

Kraljic portfolio purchasing model - oolshero

Figure 1 – Kraljic portfolio purchasing model

Procurement products

Using these two dimensions within the Kraljic matrix, Peter Kraljic distinguishes between four types of procurement products. Each type requires a different procurement strategy. Only when you make that connection will the matrix really work for you.

Strategic products

Strategic products (High impact on profit and high delivery risk) have a major impact on profit and a high delivery risk. These are often raw materials or critical components that directly determine the cost price and continuity of the end product. They are usually purchased from a limited number of suppliers, sometimes even from a single party. This means that the risk lies directly in the dependency.

The balance of power between the company and the supplier is usually fairly even. Both parties have a lot to lose if the relationship goes wrong. The logical strategy is therefore to build a partnership. This could include joint planning, long-term contracts, joint improvement projects, and clear agreements on quality, availability, and service. Price is important, but continuity, reliability, and innovation are more important.

Bottleneck products

Bottleneck products (low impact on profit and high delivery risk) do not represent significant financial value, but they are a vulnerable factor in the supply chain. These are products or services that are indispensable to the process but difficult to obtain. Examples include specific components, specialist services, or products with long delivery times.

The balance of power between the company and the supplier is often skewed in favor of the supplier. The strategy therefore focuses on reducing vulnerability. For example, organizations build up extra buffer stock, actively seek alternative suppliers, or investigate technical substitutes. Clear agreements on delivery times, service, and support help to further limit risks, so that a disruption does not immediately lead to major operational problems.

Leverage products

Leverage products (High impact on profit and low delivery risk) have a clear impact on the cost price of the end product, while the delivery risk is relatively low. There are multiple suppliers, products are easily comparable, and supply is sufficient. A small price change or difference in quality can have an immediate impact on the total costs.

In this quadrant, the purchasing organization usually has the strongest position. This means that you mainly achieve results by making smart use of volume. Think of bundling purchases, organizing tenders, regularly requesting and comparing quotes, and negotiating prices and conditions sharply. By making clear performance agreements and structuring contracts smartly, the relationship with suppliers remains professional and balanced, while you get the most out of your purchasing.

Routine products

Routine products (low impact on profit and low delivery risk) cause the fewest problems in terms of purchasing. They represent a limited value, are widely available, and can often be easily purchased from multiple suppliers. Think of standard office supplies or simple consumables.

The balance of power between the company and the supplier is usually even here. The biggest profit lies less in the price per item and more in efficiency. By increasing production standardization, choosing a fixed supplier with a catalog agreement, and automating ordering processes, you save time and process costs. This means that employees have to pay as little attention as possible to this category, leaving more room for the product groups that really make a difference.

Kraljic Matrix: steps in the purchasing process

Peter Kraljic recommends the following steps in the entire purchasing process:

Prepare portfolio analysis
Determine criteria for profit impact and supply risk
Determine the detail level of the portfolio analysis
Fill in the matrix
Analyze and discuss results
Determine purchasing portfolio strategy and improvement actions per quadrant of the framework.
Implement and monitor strategy

This step-by-step makes it easier to control stock management. This prevents obsolescent stock and excess supplies and this leads to cost reduction.

Spreading via the Kraljic portfolio purchasing model

Using the Kraljic portfolio purchasing model, an organization can professionalize and improve its purchasing performance which may produce considerable cost savings. In order to avoid unnecessary risks, it is important to spread the goods across the four quadrants.

A supplier should not have the upper hand nor have power over an organization. Precondition is that each product or product group can be placed into the matrix.

Preferably, a product is placed only in one of the quadrants. When agreement has been reached about the position of the products within the Kraljic portfolio purchasing model, it can be determined which actions need to be taken to achieve a better positioning.

The purchasing strategy can be prepared for each part of the this model. Subsequently, it can be concluded whether a product is in the right quadrant or whether it would be better to move it to another quadrant. In that case, discussions must be had with the supplier and new supply terms and conditions should be drawn up.

Tip: Combine the Kraljic matrix to determine which suppliers are truly strategic with Supplier Relationship Management (SRM), so that you can structurally organize the relationship with these strategic suppliers and directly link your portfolio analysis to concrete actions in your supplier management.

Kraljic matrix in practice: example of a procurement portfolio

Imagine a medium-sized manufacturing organization that makes consumer products. Every month, a significant budget is spent on purchasing: raw materials, packaging materials, IT licenses, and office supplies. As long as you view everything as one large expense item, it remains unclear. When you use the Kraljic matrix, it becomes clear where the real risk and impact lie.

The purchasing team starts with a simple analysis. With regard to raw materials, the team sees that the costs are high, that there are only a few large suppliers, and that delivery problems have a direct impact on production and profit. In the Kraljic matrix, these are classified as strategic products. Here, it’s all about cooperation, joint planning, and longer agreements, because delivery reliability is crucial.

The picture is different for packaging materials. Costs are important, but there are multiple suppliers and the risk of failure is lower. This category falls into the leveraged products corner. The organization can bundle volumes, negotiate competitive prices, and regularly compare quotes. The focus is on good value for money without unnecessary complexity.

IT licenses form a third category. The total spend is smaller than for raw materials, but the dependency is high. If software is unavailable or there is only one supplier, processes can come to a standstill. In the Kraljic matrix, these types of categories often emerge as bottleneck products. The strategy focuses on risk management, for example through clear support agreements, emergency scenarios, and alternative solutions where possible.

Office supplies are the most straightforward. They are readily available, there are many suppliers, and the risk of failure is low. In terms of the Kraljic matrix, these are non-critical products. Here, the focus is mainly on convenience and efficiency. A regular supplier, an online catalog, and automatic orders ensure that employees spend as little time as possible on this.

Looking at a purchasing portfolio in this way makes the Kraljic matrix immediately tangible. Managers and purchasers not only see where categories end up, but also have a different conversation. Instead of choosing the same approach everywhere, a targeted strategy with clear priorities is created for each category.

Recommended reading on the Kraljic matrix

This literature offers both Kraljic’s classic foundation and modern, practical insights. This creates a mix of theory and directly applicable tools for effectively using the matrix in daily purchasing and supply chain decisions.

Caniels, M. C. J., & Gelderman, C. (2005). Purchasing strategies in the Kraljic matrix — a power and dependence perspective. Journal of Purchasing and Supply Management, 11, 141–155. → Deepens the model with factors such as power and dependence between buyer and supplier; helps to show that not every relationship is “one size fits all”.
Hesping, F., & Schiele, H. (2016). Matching tactical sourcing levers with the Kraljic matrix. Journal of Supply Chain Management, 52(2), 18–36. → Investigates whether and how different tactics are used per quadrant of the matrix — important to enrich your article with empirical evidence rather than just theory.
Kraljic, P. (1983). Purchasing must become supply management. Harvard Business Review, 61(5), 109-117. → The classic and original source of the matrix. Indispensable for truly understanding the basic principles and rationale behind the model.
Lysons, K., & Farrington, B. (2016). Purchasing and Supply Chain Management. Harlow, UK: Pearson. → Combines theoretical models with practical tools; suitable for explaining in your article how companies use the Kraljic matrix in daily practice.
Monczka, R. M., Handfield, R. B., Giunipero, L. C., & Patterson, J. L. (2022). Purchasing and Supply Chain Management. MA: Cengage. → Provides an up-to-date overview of purchasing strategies, risk management, and supplier relationships—which puts the Kraljic matrix in context and makes it relevant to modern supply chains.
Montgomery, R. T., & Weinberg, C. B. (2018). A quantified Kraljic Portfolio Matrix: Using decision analysis to support purchasing decisions. Journal of Supply Chain Decisions, 4(1), 22–38. → Shows how to quantify the matrix and use it more objectively for strategic purchasing — super useful if you want to help your readers apply the Kraljic matrix in practice.
van Weele, A. J. (2020). Purchasing and Supply Chain Management: Analysis, Planning and Practice. London, UK: Cengage. → This book places the Kraljic matrix in the broader field of purchasing & supply chain management and helps your readers understand how the matrix works in conjunction with other strategies.
Ye, Y. (2021). Empirical investigation of Kraljic portfolio matrix in service procurement. Journal of Supply Chain Management and Operations, 19(2), 45–61. → Applies the model to services (rather than physical goods), demonstrating the matrix’s broad applicability. Highly relevant for modern organizations with significant service procurement.

How to cite this article:
Mulder, P. (2013). Kraljic Matrix. Retrieved [insert date] from Toolshero: https://www.toolshero.com/strategy/kraljic-matrix/

Original publication date: 10/28/2013 | Last update: 12/02/2025

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Article by:

Patty Mulder

Patty Mulder is an Dutch expert on Management Skills, Personal Effectiveness and Business Communication. She is also a Content writer, Business Coach and Company Trainer and lives in the Netherlands (Europe).
Note: all her articles are written in Dutch and we translated her articles to English!