How to Use the Kraljic Framework to Make Your Supply Chain Agile: A Deep Dive (Part 2)

In Part 1, we explored the Kraljic matrix as a fundamental tool for strategic sourcing, breaking down its four categories and examining the value each brings to supply chain management. Now, as we move deeper into the framework, our focus shifts towards agility — an increasingly essential trait for supply chains, especially in todays fast-paced and dynamic market. Adapting the Kraljic model for agility empowers businesses to respond swiftly to market shifts and disruptions, ensuring supply chains remain resilient and responsive. Here’s how to adjust each category of the Kraljic matrix to enhance agility in supply chains.

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In the traditional Kraljic framework, strategic items represent high-impact, high-risk goods that are crucial to operations and competitiveness. Relationships with suppliers of these items often span years, fostering reliability and stability. However, in an agile supply chain, flexibility and adaptability become just as important. In our markets, where demand can change overnight and regulations or economic conditions may shift unexpectedly, maintaining agility for strategic items is a critical competitive advantage.

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? ?????????????????? ??????????????????: For strategic items, we should consider building a network of primary and secondary suppliers. Although these items are typically sourced from a single trusted supplier, having alternatives minimizes risks. Cultivate backup relationships, even if they represent a higher cost, to ensure continuity in case the primary supplier faces disruptions.

? ???????????? ???? ?????????????????????? ????????????????: Working collaboratively with suppliers is absolutely important to develop joint contingency plans. This might include shared risk assessments, scenario planning for various disruption events, or mapping out alternative sourcing and production pathways. Establishing "what-if" scenarios helps both parties understand their roles and responsibilities, ensuring a faster response if disruptions occur.

? ?????????????? ???????? ??????????: In my opinion, this is one of the most important levers a Procurement team should explore. Shorter lead times allow for quicker inventory turns, enabling agile responses to demand fluctuations. Continuous improvement initiatives, such as TOC, lean manufacturing techniques, kaizen, or Six Sigma, can be leveraged to reduce lead times. Collaborative improvement projects with suppliers can increase the efficiency of strategic item production, thus enhancing supply chain responsiveness.

? ?????????????????? ?????????????????????? ??????????????: Implement mutually agreed-upon performance metrics that include agility and responsiveness as key criteria. Supplier performance reviews should go beyond cost and quality, integrating metrics that evaluate flexibility in production, response to last-minute changes in scheduling, and adaptability to evolving demand patterns.

? ???????????????? ?????????????? ??????????????????: Implement digital tools that allow real-time communication and visibility with strategic suppliers. Technologies like AI-driven forecasting, digital twin models, and advanced ERP systems enable dynamic supply planning and improve alignment on critical metrics. These solutions provide accurate data, reducing response times and enabling informed decision-making.

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Leverage items are easier to source, with multiple suppliers competing on price and availability. While cost control remains important, building agility in this category means prioritizing suppliers that can scale production and pivot to meet fluctuating demands. For these items, an agile approach enables quick response to seasonal spikes, promotional campaigns, or other unexpected surges in demand, which are common in consumer-driven markets like ours.

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? ?????????????????? ???????????????? ??????????????????: Transparency and flexibility is key to agile leverage item management. One should opt for contracts that accommodate rapid adjustments in order volumes, pricing structures, and delivery terms. For instance, agreements might include minimum order quantities during off-peak periods with options for scaling up, benefiting both parties through consistent engagement while maintaining flexibility.

? ?????????????? ???????????????? ?????????????????????? ????????????????: Procurement teams should move beyond the traditional focus on low cost. We should encourage fast delivery, quality consistency, and responsiveness by implementing supplier performance programs that reward suppliers for agility. Programs that recognize adaptive capabilities can foster a culture of agility and innovation, prompting suppliers to improve their scalability and response times.

? ?????????? ?? ???????????? ???????????????? ??????????????: While single-sourcing may be cost-effective, multi-sourcing improves resilience. Cultivating a network of suppliers for leverage items, allows us to balance cost-effectiveness with the flexibility to shift production between suppliers. For example, partnering with suppliers in diverse geographic regions can mitigate risks associated with localized disruptions.

? ???????????????? ?????????????????? ????????????????????: Use demand forecasting and inventory optimization tools to manage leverage items effectively. AI-driven demand forecasting can predict trends based on historical data, seasonal patterns, and real-time inputs, allowing for better planning and more precise order quantities.

? ???????????????????? ???????????????? ??????????????????????????: Deploy cloud-based platforms or supply chain portals to streamline communication with leverage item suppliers. Digital communication enables faster responses to demand adjustments and improves alignment, ensuring everyone operates with the latest information.

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Bottleneck items have a high potential for supply disruption, though their direct profit impact is often low. In an agile framework, managing bottleneck items is about anticipating risks and building a proactive response plan. Although these items are challenging to replace, they’re vital for ensuring production continuity, making risk mitigation essential for agility.

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? ?????????????????????????? ??????????????????: To reduce dependency on single suppliers, we need to maintain a buffer stock of bottleneck items. Buffer inventory levels need to be carefully calculated based on lead times, demand variability, and potential disruption frequency. In India, for example, transportation disruptions are more common, and hence buffer stocks provide essential breathing room.

? ?????????????? ???????????????? ????????????????????????: Work with bottleneck suppliers to build their capacity and flexibility. Investing in supplier training, enhancing their production capabilities, and facilitating technology upgrades can strengthen supplier resilience. Supporting suppliers’ scalability helps them ramp up production if demand increases or if other sources fail.

? ?????????????? ?????????????????????? ?????????????????? ???? ??????????????: In my opinion, material substitution (where the situation allows us) is a very novel way of addressing Bottle neck issue. For instance, if a key material is difficult to source, consider collaborating with suppliers on alternative materials that provide similar functionality but are easier to obtain. Get this option approved right at the beginning for effective changeover in case a disruption arises.

? ?????????????? ?????????????? ???????? ??????????????????????: We should establish a process for continuous risk evaluation of bottleneck items. Assess factors such as supplier dependency, geopolitical risks, and regulatory impacts. By staying vigilant about potential risks, we can adapt our sourcing strategy as needed, implementing early warnings and triggers for preemptive action.

? ?????????????? ?????????????? ???????? ???????????????????? ??????????: Many of our organizations would also have the luxury of leveraging advanced analytics and risk management platforms for monitoring real-time supply chain data for bottleneck items. Risk management tools can track global and local disruptions, alerting us to issues like shipping delays, regulatory changes, or labor strikes, enabling swift response to emerging threats.

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Non-critical items are low-cost and low-risk, but frequent disruptions can cause minor delays that cumulatively impact operations. By applying automation and streamlining processes for these items, we can free up resources to focus on more strategic needs, improving overall agility.

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???????????????? ?????????????????????? ??????????????????: Implement automated procurement for non-critical items, including the use of auto-reorder functionalities or robotic process automation (RPA) for replenishment. Automating orders for commonly used, non-critical items reduces manual errors and frees up our teams, to focus on strategic tasks.

?????????????????????? ??????????????????: Consolidating suppliers helps simplify management and logistics for non-critical items. A smaller supplier base reduces administrative tasks, enhances negotiation leverage, and can improve order consistency, making the supply chain more efficient and less prone to disruptions.

?????????????????? ?????????????????????? ????????????????????: I would suggest to streamline non-critical item sourcing through a centralized team that also standardizes processes and consolidates orders. This approach improves negotiation leverage and creates uniformity in procurement procedures while enhancing agility.

?????????? ?? ????????????-?????????????? ?????????????????? (??????) ????????????????: Engage suppliers to maintain and replenish inventory levels, allowing them to handle the restocking of non-critical items. VMI helps maintain supply continuity while minimizing internal workload, as suppliers take responsibility for keeping stock levels aligned with agreed-upon thresholds.

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By making these targeted adjustments, the Kraljic framework transforms from a static sourcing tool into a dynamic model for building an agile supply chain. Each category’s unique requirements for flexibility, responsiveness, and contingency planning ensure that Procurement can handle fluctuations in demand, navigate disruptions, and maintain resilience across the supply chain. Embracing agility within each segment ensures our supply chain remains robust and adaptable — ready to thrive in the uncertainties of today’s dynamic market.

This ends the second part of our deep dive, setting the stage for using the Kraljic framework for agility. In the third and final part, we’ll explore how we can measure agility of our suppliers, integrate technology to further optimize processes, and continually refine our strategy.