Sourcing portfolio analysis and power positioning: towards a “paradigm shift” in category management and strategic sourcing

Abstract

Purpose – The paper aims to present the case for a “paradigm shift” in current thinking about how to undertake category management and develop sourcing strategies using power positioning techniques. The case is made based on the growing evidence of a mismatch between currently dominant academic and consulting methodologies and the reality of professional managerial practice. Design/methodology/approach – The paper provides a critique of the currently dominant thinking about how to conduct category management and strategic sourcing using the Kraljic Purchasing Portfolio Analysis methodology and the more recent Purchasing Chessboard approach. The critique focuses on their lack of analytical rigour when segmenting categories of supply, and their lack of robustness when making practical recommendations for managers when developing sourcing strategies. Findings – The paper demonstrates how (building on the initial power positioning approach outlined, but not fully developed, by Kraljic) a new approach to portfolio analysis can be developed. Sourcing Portfolio Analysis identifies over 30 strategic sourcing strategies for managers to utilise. Using a simple case study, the power of this new methodology to provide managers with more comprehensive and effective sourcing strategies is demonstrated. Research limitations/implications – Because of the power of this new approach, and the need to challenge existing methodologies, researchers are encouraged to utilise it and try help to generate a “paradigm shift” in current thinking within the profession. Practical implications – The paper provides the basis for a future more strategic supply management, rather than the currently tactical spend management, approach to sourcing. Originality/value – This paper provides a new approach to portfolio analysis.