Assessing suppliers for strategic integration: a portfolio approach

Alessandro Brun and Margherita Pero

International Journal of Business Excellence, 2011, vol. 4, issue 3, 346-370

Abstract: Since Kraljic's (1983) seminal work, purchasing departments in the most successful organisations adopted portfolio approaches to supplier management. However these models fail to consider final market demand and price volatility, thus leading buyers to establish with suppliers long-term relationships also when the investments are not properly rewarded. Moreover, portfolio approaches provides high level guidelines seldom integrated with operative tools such as vendor rating systems. This paper presents a new portfolio model that, taking into account final market features, indicates both the level of right buyer-supplier integration and the evaluation parameters to assess when choosing the supplier for that relationship. Expert interviews and a case study have been performed to test the proposed model. The results indicate that, for high supply market risk, strategic product must be purchased with different strategies depending on the difficulty of the downstream market. Moreover, different parameters should be assessed depending on the strategy adopted.

Keywords: purchasing processes; supplier performance; performance evaluation; partnering; partners; strategic integration; portfolio approaches; Peter Kraljic; supplier management; final market demand; price volatility; buyers; long-term relationships; investments; high level guidelines; operative tools; vendor ratings; final markets; evaluation parameters; high supply; market risks; strategic products; downstream markets; Italy; business excellence. (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (1)

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