The paper 'Strategic Procurement and Commercial Relationship' is a great example of a Business Case Study. Purchasing is a very vital department in an organization or firm or an institution as it enabled them to remain competitive in the market. The enhancement in the rise of the purchase within a firm or an organization or company is due to the percentage of turnover that is directly spent on the products, services as well as the raw materials. The increase is because of the increase in outsourcing parts of production as well as tasks that aren’ t considered to be part of a firm or company or an organization (Faber, 2007).
The purchaser should understand his or her duty or role during the purchase process and that the purchase encompasses more dimensions. Was made by a person called Peter Kraljic by making a two-by-two which had the risk of availability of a product on the X-axis as well as in of the financial risks on the Y-axis. All the products that have been purchased are placed in one of the four fields and then each of the fields results in a different approach, taking into consideration that the lines between the four fields are vague (Caniels, 2005). The four fields include; leverage products which are the products that have been brought on a large scale.
For this reason, a small change in the prices has a very huge impact on the total costs of the products as well as the profits that are expected from the purchase. The aim or goal of the purchaser is always to get the products at the lowest price as possible, and that is always made possible or achieved by the purchaser playing off different suppliers against other suppliers.
The purchaser can also achieve that by ordering products in large volumes (Gelderman, 2005). Also, the purchaser can also further achieve this by buying or purchasing more different products from a specific supplier then request the supplier for a discount. The bulk products are also found in the category. Another example of the four fields is the critical products which are also known as bottleneck products. The products are always tough to get; that may always because there is only one supplier or few suppliers or it may also mean that the harvest of the products has failed.
In those instances, firms or organizations are always afraid of the nondelivery as well as failing production. In such cases, a company or a firm or an organization always wants to make sure or ensure supply. They always do that by changing or focusing on the items that are so easy to get, they also always do that by asking the supplier to give priority to them (Faber, 2007).
Though, for the firms to achieve that, they have to pay high prices compared to their competitors. Another example of the four fields is the strategic product which is a key to success for the product. If the products are failing to form the way they are expected to, then the customer will, in turn, reclaim his or her money, and also the product will not be sold. Each and every product should have its unique quality, but the products are very special that the supplier has to understand the consequences or penalties or costs that may occur if he or she fails to deliver the quality (Faber, 2007).
In such cases, the purchaser may opt for forming a partnership; the supplier does this by promising a long-term contract as well as promising future deals.
Faber, B., Lamers, N. and Pieters, R., 2007, September. Models for decision making in purchasing: Kraljic versus Monczka. In International symposium on logistics and industrial informatics (pp. 13-15).
Christopher, M. and Towill, D., 2001. An integrated model for the design of agile supply chains. International Journal of Physical Distribution & Logistics Management, 31(4), pp.235-246.
Caniels, M.C. and Gelderman, C.J., 2005. Purchasing strategies in the Kraljic matrix—A power and dependence perspective. Journal of Purchasing and Supply Management, 11(2), pp.141-155.
Gelderman, C.J. and Van Weele, A.J., 2003. Handling measurement issues and strategic directions in Kraljic's purchasing portfolio model. Journal of purchasing and supply management, 9(5), pp.207-216.
Cannon, J.P. and Homburg, C., 2001. Buyer-supplier relationships and customer firm costs. Journal of Marketing, 65(1), pp.29-43.