What is the Kraljic matrix?

A two-by-two model plotting supply risk against profit impact to classify suppliers into strategic, leverage, bottleneck and non-critical (routine) segments, each requiring a different procurement approach.

How often should segmentation be reviewed?

At least annually and whenever a major market, volume or supply-base change occurs. A supplier that was routine can quickly become bottleneck if its alternatives disappear.

Should procurement inform suppliers of their segment?

For strategic suppliers, sharing the segment can strengthen the relationship and align expectations. For leverage or routine suppliers, it is usually not disclosed as it could weaken negotiating position.

What contract type suits each Kraljic segment?

Strategic suppliers typically warrant long-term, relationship-driven contracts with SLAs and joint governance; leverage suppliers are contracted competitively with shorter terms; bottleneck suppliers need security-of-supply clauses; routine suppliers suit catalogues and framework agreements.

How does segmentation reduce supply chain risk?

By identifying which suppliers are critical and single-sourced, segmentation directs attention toward building alternatives, stock buffers and contingency arrangements before a disruption occurs rather than after.

Supplier segmentation

Grouping suppliers by value and risk so management effort and relationship type match their strategic importance.

Définition

Supplier segmentation classifies the supply base, often along spend and supply-risk axes (Kraljic-style), into categories such as strategic, leverage, bottleneck and routine. The segment dictates the sourcing approach, contract type and relationship intensity, so scarce procurement attention goes where it adds most value.

Exemple

A single-source bottleneck supplier gets a continuity plan and buffer stock, while routine office supplies move to a self-service catalogue.

Pourquoi c'est un risque pour l'entreprise

Treating all suppliers identically wastes procurement capacity on low-value relationships while under-governing critical dependencies. A single-source strategic supplier that fails or is poorly managed can halt production, yet organisations without segmentation often discover this exposure only when a disruption is already underway.

Comment le gérer

Plot suppliers on a spend-versus-risk matrix and assign each a segment before allocating governance effort.
Define a distinct management approach for each segment: strategic suppliers get regular executive reviews, routine suppliers get a catalogue.
Refresh segmentation at least annually and whenever spend patterns or supply risk change materially.
Build contingency plans and alternative suppliers for bottleneck and strategic segments.
Use segmentation outputs to set contract type and term length, matching commitment to strategic importance.

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