Title: The strategic procurement of raw material: a case study

Authors: Sanjita Jaipuria; Mamata Jenamani; M. Ramkumar

Addresses: Rajiv Gandhi Indian Institute of Management Shillong, Mayurbhanj Complex, Nongthymmai, Shillong, Meghalaya, 793014, India ' Department of Industrial and Systems Engineering, Indian Institute of Technology Kharagpur, Kharagpur, 721302, India ' Department of Industrial and Systems Engineering, Indian Institute of Technology Kharagpur, Kharagpur, 721302, India

Abstract: Strategic procurement is essential to ensure uninterrupted availability of raw material at a competitive cost for the smooth production operation. Kraljic's purchasing portfolio model is widely used in strategic procurement practice. However, hardly any quantitative model has been discussed in existing literature to develop Kraljic's sourcing matrix. Hence, in this study a quantitative approach has been proposed to develop Kraljic's sourcing matrix. Many times the market condition affects the procurement activity. The total procurement cost generally comprises of different cost components and through adopting strategic approach the controllable cost components can be reduced. Therefore, including Kraljic's purchasing portfolio model, two techniques such as spend analysis and market analysis is applied to identify the strategic issues based on the cost structure and market condition. In this study the framework to develop procurement strategy using spend analysis, Kraljic's purchasing portfolio model, and market analysis is described through a case study.

Keywords: Kraljic; purchasing portfolio model; procurement strategy; spend analysis; market analysis; strategic procurement; raw materials; case study; sourcing matrix.

DOI: 10.1504/IJPM.2016.078689

International Journal of Procurement Management, 2016 Vol.9 No.5, pp.524 - 547

Received: 30 Apr 2015
Accepted: 05 Jun 2015
Published online: 01 Sep 2016 *

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