Procurement Glossary
Kraljic matrix: Strategic portfolio management in Procurement
November 19, 2025
The Kraljic matrix is a proven tool for the strategic categorization of procurement objects according to supply risk and profit impact. It enables purchasing organizations to take a differentiated approach to various Categories , thereby optimizing the use of resources and procurement strategies. Find out below how the matrix works, which methods are used and how you can use it to systematically align your procurement strategy.
Key Facts
- Developed in 1983 by Peter Kraljic for strategic procurement management
- Classifies procurement objects into four quadrants: Routine, bottleneck, leverage and strategic items
- Based on two dimensions: Supply risk and profit impact
- Enables differentiated procurement strategies depending on the item category
- Standard tool in modern purchasing organizations worldwide
Contents
Definition: Kraljic matrix
The Kraljic matrix systematically structures the procurement portfolio and creates the basis for strategic decisions in Procurement.
Basic principle and structure
The matrix classifies procurement objects using two axes: the profit impact on the Y-axis and the supply risk on the X-axis. This categorization is based on:
- Evaluation of purchasing volume and cost relevance
- Analysis of supplier availability and market concentration
- Assessment of substitution options
- Assessment of the strategic importance for the company
The four categories in detail
Each quadrant requires specific procurement approaches: Routine items (low/low) are handled efficiently, bottleneck items (low/high) require supply assurance, leverage items (high/low) offer cost-cutting potential and strategic items (high/high) require intensive supplier landscape analysis.
Importance of the Kraljic matrix in Procurement
As the foundation of strategic procurement management, the matrix enables a systematic portfolio analysis in Procurement and supports the development of targeted sourcing strategies.
Methods and procedures
The successful implementation of the Kraljic matrix requires structured analysis methods and clear evaluation criteria for both dimensions.
Data collection and evaluation
Positioning begins with the systematic recording of relevant key figures. The purchasing volume, share of total costs and influence on product quality are analyzed to determine the impact on profits. The supply risk is determined by the number of suppliers, geographical distribution and market dynamics.
Scoring models and weighting
Professional application uses weighted scoring models with defined criteria. The value driver analysis of the Category supports the objective evaluation. Typical weighting factors include:
- Purchasing volume and cost share (40-50%)
- Supplier concentration and availability (30-40%)
- Technological complexity and substitution possibilities (10-20%)
Strategy derivation per quadrant
Specific recommendations for action are derived from the positioning. The sourcing levels are prioritized according to the category and implemented in a structured manner in a pipeline of measures.
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Key figures for controlling the Kraljic matrix
Effective key figures measure both the quality of the portfolio analysis and the success of the derived procurement strategies.
Portfolio quality indicators
The evaluation accuracy is measured by key figures such as classification stability and evaluator consistency. The proportion of correctly positioned items after market changes shows the forecasting quality of the matrix. In addition, the update frequency measures the dynamics of portfolio management.
Strategy implementation metrics
Quadrant-specific KPIs evaluate the success of the strategy: cost savings for leverage articles, security of supply for bottleneck articles and efficiency increases for routine articles. The Should-Cost-Library supports target setting and performance measurement.
Risk and compliance indicators
Supplier concentration, geographical diversification and default probabilities measure the supply risk quantitatively. The market model provides the basis for risk-adjusted key figures and early warning signals in the event of critical developments.
Risks, dependencies and countermeasures
The use of the Kraljic matrix involves specific risks that can be minimized by taking appropriate measures.
Static view and market dynamics
A common mistake is to update the matrix positioning too infrequently. Markets change rapidly, new suppliers emerge and technologies continue to develop. Without regular reviews, companies can pursue outdated strategies and miss opportunities.
Subjective valuation errors
The assessment of risk and profit impact is often subject to cognitive distortions. Unclear evaluation criteria lead to inconsistent results between different evaluators. A standardized product group strategy with defined metrics reduces this subjectivity.
Overcomplexity and waste of resources
Some organizations apply the matrix in too much detail to each article group, which leads to analysis paralysis. Reducing complexity by focusing on essential categories and integrating them into product group management can help here.
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Practical example
An automotive manufacturer reclassifies its procurement objects: standard screws (low risk, low cost) are procured automatically as routine items via e-procurement. Special sensors (high risk, low cost) are considered bottleneck items and require dual sourcing strategies. Steel (low risk, high costs) is optimized as a leverage item via bundling and market power. Battery cells (high risk, high costs) are secured as strategic items through long-term partnerships.
- Cost reduction of 12% for lever articles through bundled tenders
- Supply reliability of 99.8% for bottleneck articles thanks to dual sourcing
- Process efficiency increase of 35% for routine articles through automation
Trends & developments around the Kraljic matrix
The digital transformation and changing market conditions are adding new dimensions and applications to the classic Kraljic matrix.
Digitalization and AI integration
Modern purchasing organizations use artificial intelligence for automated data analysis and dynamic portfolio evaluation. Machine learning algorithms recognize patterns in market data and predict changes in risk. This enables continuous updating of the matrix instead of static annual analyses.
Extended risk dimensions
Sustainability risks, cyber security and geopolitical factors supplement the traditional assessment criteria. The competitive analysis of the procurement market is increasingly taking ESG criteria and supply chain transparency into account as risk factors.
Agile portfolio reviews
Instead of annual reviews, companies establish quarterly or event-based portfolio reviews. The product group board uses real-time dashboards for continuous monitoring and rapid strategy adjustments in the event of market changes.
Conclusion
The Kraljic matrix remains an indispensable tool for strategic procurement management and enables the systematic differentiation of procurement strategies. Its strength lies in the structured approach and the clear derivation of actions for different article categories. Modern applications extend the classic model with digital analysis methods and dynamic evaluation approaches. However, successful implementation requires regular updating, objective evaluation criteria and integration into higher-level procurement strategies.
FAQ
How often should the Kraljic matrix be updated?
The matrix should be reviewed at least once a year and adjusted ad hoc in the event of significant market changes. In volatile markets, quarterly reviews are recommended, while stable categories can also tolerate longer cycles.
Which data sources are required for the assessment?
Internal data includes purchasing volume, number of suppliers and quality indicators. External market data such as price indices, supplier financial strength and industry analyses supplement the evaluation basis for objective positioning.
How are borderline cases between quadrants handled?
Items close to the axes require special attention and regular reassessment. Sensitivity analyses show how small parameter changes affect the classification. In case of doubt, the more conservative, lower-risk strategy is selected.
Can the matrix also be used for services?
Yes, the Kraljic matrix also works for services. Profit impact is determined by cost share and business criticality, supply risk by number of providers and degree of specialization. Consulting services are often strategic, while standard services are usually routine in nature.
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