The following is an excerpt of my response to a recent post by David Loseby:
Here is the one stat that matters most—from the ERP era through the SaaS and digital transformation era to the AI world of today, 80% of all procurement initiatives fail!
In 1983, Peter Kraljic introduced his matrix in an HBR article, Purchasing Must Become Supply Management.
While not questioning the merits of the Kraljic matrix concept, given the high rate of initiative failures during the decades of technological breakthroughs, is the model practical from a technology implementation and/or adaptability standpoint. Consider the following quote from Kraljic:
“The stable way of business life many corporate purchasing departments enjoy has been increasingly imperiled. Threats of resource depletion and raw materials scarcity, political turbulence, and government intervention in supply markets intensified competition and accelerating technological change have ended the days of no surprises. As dozens of companies have already learned, supply and demand patterns can be upset virtually overnight.” – Peter Kraljic (1983)
Kraljic’s above statement could easily apply to 2024 as it did in 1983. However, when it comes to integrating his matrix with technology of any era, the results have been consistently disappointing, to say the least. Of course, maybe the same thing can be said regarding Michael Porter’s model or any of the past models from the late 1970s and 1980s.
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Procurement Insights
41 years later, is the Kraljic matrix still valid?
Posted on July 22, 2024
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The following is an excerpt of my response to a recent post by David Loseby:
Here is the one stat that matters most—from the ERP era through the SaaS and digital transformation era to the AI world of today, 80% of all procurement initiatives fail!
In 1983, Peter Kraljic introduced his matrix in an HBR article, Purchasing Must Become Supply Management.
While not questioning the merits of the Kraljic matrix concept, given the high rate of initiative failures during the decades of technological breakthroughs, is the model practical from a technology implementation and/or adaptability standpoint. Consider the following quote from Kraljic:
“The stable way of business life many corporate purchasing departments enjoy has been increasingly imperiled. Threats of resource depletion and raw materials scarcity, political turbulence, and government intervention in supply markets intensified competition and accelerating technological change have ended the days of no surprises. As dozens of companies have already learned, supply and demand patterns can be upset virtually overnight.” – Peter Kraljic (1983)
Kraljic’s above statement could easily apply to 2024 as it did in 1983. However, when it comes to integrating his matrix with technology of any era, the results have been consistently disappointing, to say the least. Of course, maybe the same thing can be said regarding Michael Porter’s model or any of the past models from the late 1970s and 1980s.
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