Positioning of commodities using the Kraljic Portfolio Matrix

This article proposes a more objective methodology to classify and position commodities (works and services) in the Kraljic Portfolio Matrix (KPM) in a continuous scale around the two dimensions of supply risk and profit impact—the two dimensions which mainly influence the choice of a firm's purchasing strategy. Fuzzy multi-attribute scoring is used to assign performance scores to different commodities on supply risk as well as profit impact attributes. With a multidimensional scaling approach the commodities are placed in the KPM. An application of the proposed approach is attempted on commodities procured by the Rural Development Department of a state government in India.

► The Kraljic Portfolio Matrix (KPM) supports firms in developing purchasing strategies.
► A more objective approach for positioning commodities in the KPM is proposed.
► Fuzzy multi-attribute decision making assigns weights to supply risk and profit impact.
► Commodities are positioned through multidimensional scaling (MDS).