Activity 22
Sourcing strategy wheel

Figure 4.6

Figure 4.6 The sourcing strategy wheel

Overview

There are many options available when it comes to market engagement. Based upon Kraljic’s portfolio analysis model, the sourcing strategy wheel explores the various routes that can be pursued. It was developed in order to aid category planning, and depending upon the category characteristics (e.g. high risk, low expenditure), a selection of corresponding sourcing methods is outlined.

In effect, the sourcing strategy wheel acts as a reminder of the potential points of entry on the supply side and possible mediums for implementing the category solution in the market.

Elements

The sourcing strategies are based on category positioning, which links back to Kraljic’s portfolio analysis, as described in Figure 4.7.

Figure 4.7
Figure 4.7

Figure 4.7 Elements of the sourcing strategy wheel

So what?

The sourcing strategy wheel is a useful guide to the range of potential supplier-engagement strategies available to the category manager. Undertaking supplier positioning analysis (i.e. Kraljic portfolio analysis) beforehand can be used to help develop the potential options, which means there should be alignment throughout the category process.

Category management application

Limitations

The sourcing strategy wheel merely acts as a checklist of potential market sourcing options. While it helps the user understand the selection criteria for each potential option, it does not assist with understanding how to undertake them. This is left to the knowledge and experience of the category manager, who may not be familiar with all of the ideas identified.

It should also be noted that not all of the options may be available to those working in a public-sector environment. For example, competitive negotiation may not be possible in relation to some acquisitions due to prevailing public procurement regulations.

Template

The following template can be used to identify potential solutions for your category: