Muhammad Adeel

Registration No# 14386

Kraljic Purchasing Model
Kraljic model is use for the segmentation of the product. It is based on
Risk (High/Low) and Profit (High/Low). On the bases of these factor it
produces four grids Bottle Neck, Non-Critical, Strategic and Leverage.

Kralijic Model is use to identify; weather the item is Bottle Neck, Non-
Critical, Strategic and Leverage. So that we take purchasing decisions
accordingly.

Bottle Neck
Those items which are having low profit margin but possess high risk
involvement. The reason to consider these as bottle neck because
manufacturer have low control over supplier. So, producer hesitate to
negotiate.
If producer is willing to achieve the dominancy so he should arrange
more suppliers. Producer should not relay on limited source.
Non-Critical
These are the items which are both lows (Profit and Risk). These can be
consumables or daily routine general items. Here no specified supplier/
procedure is needed for the purchasing of goods.
Strategic
Those items which are having high profit margins also the risk
involvement is high so we put that is strategic component. These are the
core component. Here only those suppliers are acceptable who have
command and who can manage the products quality.
Leverage
They have high profit impact but lower in risk. These have high profit
impact and its risk is mitigated by multiple suppliers.