PROCUREMENT PROJECT VALUE MATRIX
Business Impact Ratio = Revenue impact
TCO

Project Complexity Ratio = Project Complexity...
Missing Bricks for Value Creation

KRALJIC MATRIX MOST IMPORTANT STRATEGIC TOOL USED IN THE TELECOM INDUSTRY FOR
STRATEGIC...
Missing Bricks for Value Creation

The procurement organization has been an administrative function tills Mr. Peter Kralji...
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The Kraljic matrix not answering today’s procurement strategy New theory to manage strategic Sourcing projects- By Reza Hagel CPO & Principle

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The Kraljic approach is taking into account the external factors; cost & supply which helps to identify the domain approach per segment. Most purchasing assignments are being provided as a solution rather than individual products or services. This is often the preferred approach on having an end to end solution integrator instead of a multiple suppliers and projects to manage. Even if the category planning and strategy have been initially developed, the most important for the procurement organization is to standardize the way to categories company projects to create defined guidelines for each segment. Today, the saturated, highly competitive and dynamic market require from procurement to create sustainable value rather than cost savings and security of supply. Most procurement organizations have difficulties in answering to the corporate objectives.

THE PROCUREMENT VALUE MATRIX HAS BEEN DEVELOPED TO TAKE INTO ACCOUNT INTERNAL & EXTERNAL FACTORS TO CREATE PROCUREMENT VALUE & ACHIEVE HIGHEST CUSTOMER SATISFACTION.

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The Kraljic matrix not answering today’s procurement strategy New theory to manage strategic Sourcing projects- By Reza Hagel CPO & Principle

  1. 1. PROCUREMENT PROJECT VALUE MATRIX Business Impact Ratio = Revenue impact TCO Project Complexity Ratio = Project Complexity Supply Complexity
  2. 2. Missing Bricks for Value Creation KRALJIC MATRIX MOST IMPORTANT STRATEGIC TOOL USED IN THE TELECOM INDUSTRY FOR STRATEGIC POSITIONING OF PURCHASING ITEMS Price Competition between vendors, where procurement can explore opportunity to add value Sales & buyer’s companies have equal market power. Integrated & transparent operations planning process managing the value chain together to mutual benefits 245 Suppliers 25 Vendors 5 Outsourcing 60% of spend 30% of spend Centralization, Volume bundling Identification of maverick cost on Indirect purchase such as office supplies. Demand planning, Consignment stockings - IT systems, Automating e-catalogs and e-sourcing. About 15,000 Suppliers Monopolistic/ quasi-monopolistic position due to their domain expertise. Difficult switching vendors. 15% of spend The picture represents an illustration of an Operator spend & Vendor segmentation portfolio analysis <1% of spend 100 Suppliers Page 1
  3. 3. Missing Bricks for Value Creation The procurement organization has been an administrative function tills Mr. Peter Kraljic introduced the concept of supply management, giving the procurement sector a standardized strategic approach to answer the corporate buying request. The concept has been the identification of supply risk and spend for a given category or sub-category to position the item in the Kraljic Matrix. Centralization vs. Decentralization, Synergy identifications, driving efficiency and productivity initiatives, Providing visibility and control of supply chain, Low cost Country sourcing, Outsourcing of manufacturing/ IT / Business processes and Offshoring of Operations have lead procurement to drive value by strategic purchasing solutions and partnerships. Major improvements have taken place in optimizing, standardizing, automating processes, procedures, tools and systems and driving divers cost reduction initiatives and managing a best in class supplier management function. Still, procurement seems to have reached a death end of finding new ways to show its true value to the organization; when expectation and need of procurement value creation is greater than never before. The Kraljic approach is taking into account the external factors; cost & supply which helps to identify the domain approach per segment. Most purchasing assignments are being provided as a solution rather than individual products or services. This is often the preferred approach on having an end to end solution integrator instead of a multiple suppliers and projects to manage. Even if the category planning and strategy have been initially developed, the most important for the procurement organization is to standardize the way to categories company projects to create defined guidelines for each segment. Today, the saturated, highly competitive and dynamic market require from procurement to create sustainable value rather than cost savings and security of supply. Most procurement organizations have difficulties in answering to the corporate objectives. THE PROCUREMENT VALUE MATRIX HAS BEEN DEVELOPED TO TAKE INTO ACCOUNT INTERNAL & EXTERNAL FACTORS TO CREATE PROCUREMENT VALUE & ACHIEVE HIGHEST CUSTOMER SATISFACTION. I. II. III. IV. Core Business projects Business Enabling projects Business Development projects Business Improvement Page 2

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