Supplier Evaluation (Kraljic Model)

• Supplier evaluation

  1. Using the Crowdrick model or the Crowdrick method

  2. Using Porter's Five Forces

  3. Considering bargaining power over suppliers
• 1983 Peter Krausgix Crowdrick model seen in Harvard Business Review
• Ways to evaluate suppliers according to Mr. Groudjic

  • Impact on profit: cost advantages, added value
  • Market complexity: perceived complexity, monopoly, oligopoly, technological change
• Crowdrick model components

  • Impact on profit (high or low)
  • Complexity of supplier's market (high or low)
• Crowdrick model matrix components

  • Strategic items
  • Non-critical items
  • Leverage items
  • Bottleneck items
• Strategic items in the Crowdrick model

  • Complex market perception, high impact on profits, important for long-term relationships, centralized decision-making, focus on long-term availability
• Non-critical items in the Crowdrick model

  • Simple market perception, low impact on profits, short-term relationships, decentralized decision-making, focus on process efficiency and automation
• Leverage items in the Crowdrick model

  • Intermediate complexity and impact on profits
• Bottleneck items in the Crowdrick model

  • Intermediate complexity and impact on profits
• Automating supplies

  Automate suppliers to save time and avoid labor, especially for non-critical supplies
• Types of items

  • Strategic items
  • Leverage items
  • Bottleneck items
• Leverage items


  • Low complexity in the market but high impact on profit, can provide cost advantages or added value, medium-term relationship, decentralized decisions
• Bottleneck items


  • High complexity in the market but low impact on profit, medium-term relationship, centralized organization with decentralized execution, focus on reliability and cost
• Focus on cost

  For leverage items, focus on cost only, possibly relating to purchasing economies of scale. For bottleneck items, focus on cost and reliability due to the complex market
• Chronic model
• Using the Chronic model for evaluation

  Consider cash flow issues and solutions like extending payables to suppliers based on the type of items they supply (strategic or non-critical)
• Extending payables may be a solution for cash flow issues, but it depends on whether the supplier provides strategic or non-critical items
• Adding evaluation depth by using another model for supplier relationships
• Bringing in additional models for evaluation can enhance understanding and application