🛒 Procurement & Supply Chain
Professional procurement
Procurement tools applied to negotiation: Kraljic matrix (HBR, 1983), total cost of ownership, target costing, auctions, SRM; work by P. Kraljic, A. van Weele, R. Monczka.
Full detail in the “Origin & history” section below.
Author of the library
Negotiation lecturer at KEDGE Business School
A rare threefold background serving negotiation: teaching, commercial justice and audit, backed by experience as a company director in Bordeaux.
The Kraljic matrix is the founding tool of strategic procurement segmentation. It classifies each purchasing category into one of four quadrants along two axes: financial weight (profit impact) and supply risk (scarcity, dependence, criticality of the supplier market). Each quadrant, non-critical, leverage, bottleneck, strategic, calls for a distinct negotiation posture, from pure bargaining power to long-term cooperation. It ensures you do not negotiate everything in the same way, and lets you channel negotiation energy where it creates value or protects the business.
At a glance
Vigilance: low (3.0/10) · Preparation required: 9/10
Indicative profile: it situates the “Procurement & supply chain” family as the Procurement & Supply Chain school practises it, not this technique taken in isolation. Techniques from the same family and school therefore share the same profile. NEGOCOACH editorial rating out of 10, non-experimental · the higher the “relational risk” value, the more costly the technique is to the relationship.
NEGOCOACH assessment
Tactical potential 5.7/10 (effectiveness, impact, discretion) and vigilance low (relational and ethical risk): two distinct readings, deliberately never merged into a single score that would reward risk. NEGOCOACH editorial rating calibrated from the “Procurement & supply chain” family and the “Procurement & Supply Chain” school. Each criterion is rated out of 10; click to understand what it measures.
How far the technique can carry the negotiation in the intended direction when it is well executed.
Strength of the effect produced on the counterpart's perceptions, emotions and decisions.
How hard it is for the other party to notice the technique is being used. A high value = very discreet.
The information, analysis and rehearsal required upfront to use it effectively.
Potential cost to the relationship and to trust if the technique is spotted, refused or fails. A high value = riskier.
Moral acceptability: fairness, transparency and respect for the counterpart's autonomy. A high value = more defensible.
Documented school
The school this technique stems from is documented by recognised work and established practice, without experimental consensus. This indicator qualifies the school, not this technique taken in isolation.
Indicative NEGOCOACH editorial rating, for teaching purposes. For “Relational risk”, a high value signals a cost to the relationship, not a quality.
The matrix is the work of Peter Kraljic, then head of McKinsey & Company's Düsseldorf office. He set it out in the article “Purchasing Must Become Supply Management”, published in the Harvard Business Review of September-October 1983 (no. 83509, pp. 109-117). Kraljic advances a thesis that broke with the thinking of the time: purchasing should no longer be an administrative order-placing function but a strategic “supply management”, steered according to the firm's vulnerability and the power of its supplier market. It is the first structured purchasing portfolio model; it has become the reference taught in supply chain and sourcing worldwide, and the basis of most later categorisation methods.
The matrix crosses two dimensions on a 2x2 grid. Vertical axis: profit impact (weight in total cost, volume spent, effect on profitability or on the quality of the finished product). Horizontal axis: supply risk (number of available suppliers, scarcity of the resource, barriers to entry, technological dependence, logistical or geopolitical risk). The crossing generates four quadrants, each calling for a standard strategy. Non-critical/routine items (low risk, low impact): simplify, automate, cut administrative cost. Leverage items (low risk, high impact): exploit purchasing power, competitive tendering, aggressive calls for tender. Bottleneck items (high risk, low impact): secure supply, framework contracts, buffer stocks, alternative sourcing. Strategic items (high risk, high impact): long-term partnership, co-development, collaborative relationship management. In practice, you position each purchasing family, then derive the sourcing strategy, the type of contract and the appropriate negotiation posture.
Application by context
A sales director transposes the logic to the selling side by segmenting the customer portfolio according to margin and risk of loss: strategic key accounts are handled through partnership and co-construction, while small non-critical accounts are served with standardised, automated offers.
The original terrain: the buyer positions each family (packaging, energy, rare electronic components) in a quadrant, then runs aggressive calls for tender on leverage items and switches to long-term partnership for strategic single-source components.
In labour negotiation, an HR director maps union demands according to their budgetary cost and the risk of conflict: they concede quickly on low-cost demands with a high risk of deadlock (bottleneck), and reserve hard bargaining for major financial stakes carrying low social risk.
In a crisis cell, critical resources (masks, semiconductors, energy) are classified on the same scarcity/importance axes to decide where to secure buffer stocks and emergency alternative sources before the shortage strikes.
A political negotiator segments their files according to electoral weight and difficulty of obtaining them: they trade high-impact, low-resistance measures, and secure lasting alliances on issues that are both weighty and contested.
A developer applies the grid to their suppliers of land and construction firms: for a strategic structural-works lot that is scarce on the local market, they lock in a partnership; for ordinary, competitive services, they put the work out to tender to drive prices down.
In an international negotiation, each partner is assessed according to the stakes of the deal and the cultural/relational dependence: strategic relationships demand a long-term investment in trust, whereas one-off transactions can remain purely contractual.
During an inheritance settlement, a family can rank the assets according to their financial value and their emotional charge (sentimental scarcity): ordinary objects are settled quickly, while a cooperative dialogue is arranged for assets that are both valuable and steeped in history.
Counter-techniques
Negotiation is also played on defence. Here is how to recognise this technique when it is used against you, and turn it around.
The signals that give it away
The counters that defuse it
Turn it into an advantage
Name the manoeuvre: said out loud, a technique loses most of its power.
Reacting emotionally instead of coming back to the facts.
Strengths: a simple, visual tool that can be communicated to the executive committee at once; it imposes strategic discipline by avoiding treating every category the same way; it reveals critical dependencies that are often overlooked; it provides a common language between procurement, finance and operations; it aligns negotiation posture with the reality of the balance of power. Weaknesses: classification along two binary dimensions is reductive and placement within a quadrant is partly subjective (where does the boundary lie?); the model is static whereas markets move; it looks chiefly at the buyer's point of view and ignores how the supplier, for its part, perceives the relationship (power asymmetry not modelled); it does not say how to move operationally from one quadrant to another; there is a risk of turning an analytical framework into a mechanical recipe.
To be used ahead of a sourcing strategy or an annual negotiation cycle, to prioritise a broad, heterogeneous purchasing portfolio. It is particularly relevant when the firm spends across many very different categories, when negotiation resources are limited and must be allocated, when there is a need to justify to management why one category deserves a partnership and another a competitive tender, or when seeking to reduce a critical supplier dependence. It is also useful as a teaching grid to train buyers or align a team on a shared strategic reading.
Business · The McKinsey origin: rethinking purchasing as a strategic function, In 1983, Peter Kraljic, a director at McKinsey in Düsseldorf, observed that large industrial firms were weathering the oil shocks and raw-material shortages of the 1970s without any structured supply strategy. In the Harvard Business Review he published a model urging management to classify their purchases according to profit impact and supply risk, and to differentiate their strategies radically by quadrant. The article marks the historic shift from purchasing-as-order-placing to strategic supply management and becomes the reference matrix of sourcing.
Business · Securing a bottleneck component in the automotive sector, A scenario representative of the sector: a carmaker identifies that a specific semiconductor weighs little in its total cost yet comes from a single supplier amid a worldwide shortage, a textbook case of the bottleneck quadrant. Rather than negotiating the price, the matrix points towards securing supply: a multi-year framework contract, building buffer stocks, qualifying an alternative source and a move towards partnership, so as no longer to endure the assembly-line stoppages that a component worth a few euros can trigger.
On the supplier side, recognising that a buyer is applying Kraljic shows in their differentiated posture: brutal competitive pressure and repeated calls for tender signal that they have classified you as “leverage” (they believe they hold the power). To counter this, you seek to be reclassified towards the strategic quadrant by raising the perceived risk of replacing you: technical differentiation, patents, integration into the customer's value chain, high switching costs, exclusivities. Conversely, if the buyer treats you as a strategic partner, they reveal their dependence: that is a negotiation lever. More generally, you defend yourself by breaking the information asymmetry, the buyer reasons on THEIR reading of the market; demonstrating that their alternatives are rarer or more costly than they believe shifts the category from “leverage” towards “bottleneck” and rebalances the power relationship.
The matrix remains a decision-support tool, not a truth: the boundary between quadrants is conventional and the classification depends on a subjective judgement that can be biased or instrumentalised. It adopts a one-sided reading (the buyer's) and neglects the relationship as a two-way reality, which can legitimise purely opportunistic postures. On the ethical plane, using the “leverage” quadrant to squeeze suppliers in a weak position can tip over into abuse of economic dependence, which is regulated in law (significant imbalance, abrupt termination of commercial relations). Sustainable responsibility and fairness in supplier relationships call for not reducing a partner to its box, and for integrating CSR criteria that the original matrix ignores.
Extensions and related models: Cox's “power/dependence” matrix and A.T. Kearney's Purchasing Chessboard (64 purchasing methods), which extend Kraljic into operational tactics; the supplier portfolio model that adds the symmetrical supplier perspective (how it sees us) through a customer-attractiveness matrix; ABC analysis / the Pareto principle to rank spend; the SRM (Supplier Relationship Management) segmentation matrix to grade relationships. On the general negotiation side, the logic connects with preparation by stakes/power (the stakeholder power-interest grid) and the trade-off between distributive (leverage) and integrative (strategic) strategies.
Quick exercise
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Frequently asked questions
The Kraljic matrix is the founding tool of strategic procurement segmentation. It classifies each purchasing category into one of four quadrants along two axes: financial weight (profit impact) and supply risk (scarcity, dependence, criticality of the supplier market). Each quadrant, non-critical, leverage, bottleneck, strategic, calls for a distinct negotiation posture, from pure bargaining power to long-term cooperation. It ensures you do not negotiate everything in the same way, and lets you channel negotiation energy where it creates value or protects the business.
Yes. Used in good faith it stays within a fair negotiation: it structures the exchange without deceiving the other party. Being transparent about your intentions strengthens the long-term relationship.
Reacting emotionally instead of coming back to the facts. The right reflex: slow down and reformulate.
NEGOCOACH does not assess the experimental validation of this technique in isolation. What we document is the grounding of its source school (Procurement & Supply Chain): documented school. Full detail is in the "At a glance" section of this page.
Practise with AI
Copy, paste into your assistant, replace the [brackets]. Works with ChatGPT, Claude, Gemini, Mistral, Perplexity.
Build your plan before the meeting
You are an expert negotiation coach. Help me prepare to use the "The Kraljic Matrix" technique in the following situation: [describe your situation]. Give me: the conditions for success, a 3-step script, my counterpart's likely objections and how to answer them.
Rehearse against an AI counterpart
Play the role of my counterpart in a negotiation. I am going to test the "The Kraljic Matrix" technique. React realistically and with resistance, do not give in too quickly, then at the end analyse my performance and suggest 3 concrete improvements.
Analyse a past negotiation
Here is how my negotiation went: [paste the exchanges]. Analyse whether the "The Kraljic Matrix" technique was used well, what worked, the mistakes made, and spell out precisely what I could have done better.
References
Founding works of the 🛒 Procurement & Supply Chain school this technique belongs to.
Purchasing Must Become Supply Management (Harvard Business Review)
ArticleP. Kraljic · 1983
Purchasing and Supply Chain Management
BookA. J. van Weele · 2018
Purchasing and Supply Chain Management
BookR. M. Monczka et al. · 2015
Category Management in Purchasing
BookJ. O'Brien · 2019
Procurement tools applied to negotiation: Kraljic matrix (HBR, 1983), total cost of ownership, target costing, auctions, SRM; work by P. Kraljic, A. van Weele, R. Monczka.
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Technique map
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See the counter-techniquesThe Kraljic matrix is the founding tool of strategic procurement segmentation. It classifies each purchasing category into one of four quadrants along two axes: financial weight (profit impact) and supply risk (scarcity, dependence, criticality of the supplier market). Each quadrant, non-critical, leverage, bottleneck, strategic, calls for a distinct negotiation posture, from pure bargaining power to long-term cooperation. It ensures you do not negotiate everything in the same way, and lets you channel negotiation energy where it creates value or protects the business.
Name the manoeuvre: said out loud, a technique loses most of its power.
Reacting emotionally instead of coming back to the facts.
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