Supply Chain Management — Why Aristotle Is More Important than Kraljic (Part 1)

Sigi2Sigi Osagie brings us this unusual but thought-provoking look at the art of procurement influence. Sigi is a leading expert on effectiveness in Procurement & Supply Chain Management and helps organisations and individuals to achieve enhanced performance growth to accomplish their career and organisational goals. He is the author of the highly acclaimed book “Procurement Mojo” and can be contacted on


It’s an intriguing title for a supply management article, I know. Your brain is probably trying to decipher what possible connection Aristotle might have with supply chain management in general, purchasing in particular, and, even more baffling, Peter Kraljic!

Aristotle’s teachings on persuasion and communication are vital for every one of us, not just purchasing folks. Persuasion and communication in various forms are at the core of our interactions as human beings, whether we realise it or not. If you pay attention you’ll observe it in your interactions even with family members at home.

Yet we don’t often think about theoretical concepts applied to our personal lives. We’re more likely to recognise and embrace such concepts when applied to our work. And at work, one of the most common concepts purchasing people recognise and utilise routinely is the matrix model introduced by Peter Kraljic, back in the early 1980s, for segmentation of purchases and developing related supply management strategies.

The Kraljic model is, arguably, one of the most important advancements in conceptual thinking and working practices in the purchasing field in modern times. Some commentators have questioned aspects of the model over the years. Others have sought to evolve the initial 2x2 matrix into more advanced tools, perhaps better suited to the multifarious complexities of today’s business world. Nonetheless, there can be no denying the value of the Kraljic model as one of the key elements of modern-day purchasing.

Our understanding and use of the Kraljic model, or any other technical tools for that matter, is akin to the familiarity and expertise a car mechanic builds up about, say, a hydraulic wrench or multimeter. It’s a body of knowledge acquired from his training and subsequent years on the job. But you wouldn’t keep taking your car to that car mechanic’s garage if he had a lousy attitude and despicable behaviour. No customer would.

His knowledge and skills with technical tools like the wrench, the multimeter and being able to diagnose and fix car problems make him a ‘mechanic.’ But to ensure his garage business remains successful over the long term the mechanic must also be able to interact with his customers and manage their concerns with reasonable levels of consideration and decency.

This same requirement for savoir-faire with ‘people’ applies to purchasing practitioners also. Just as the mechanic’s technical proficiency makes him a ‘mechanic,’ so too does our technical competency with Kraljic and other supply management tools make us ‘purchasers.’ And just as the mechanic needs to be good with people to keep his business successful, so too do purchasing folks need to be savvy with our stakeholders across the organisation to sustain Procurement’s success and esteem in the wider enterprise.

Being organisationally savvy is fundamentally about dexterity with people-related issues – having the right ‘soft’ skills to navigate the organisational terrain with flair.

Our competences with the technical aspects of the purchasing job are basic. Think of technical purchasing skills as ‘qualifiers’ – skills that simply qualify you to play in the purchasing sandpit; whereas soft skills are ‘order-winners,’ the key intrapersonal and interpersonal competences that enable you to win and excel in the job. You can’t possibly be a half-decent professional without the right technical skills. But to be effective and successful you must have highly developed soft skills.

And, second only to your ability to manage yourself, the most critical soft skill is your ability to manage interactions with others. This centres principally on communication (verbal and non-verbal) – most importantly, your ability to leverage persuasive communication to sell and deliver the Procurement agenda and propagate a positive Procurement brand with stakeholders across the enterprise.

Procurement provides a service. Thus, everyday, we rely on individuals in the function who liaise directly with various stakeholders across the organisation to shape and deliver that service. The quality of these Procurement people and the chemistry they have with their stakeholders is crucial. In such human interactions, ‘quality’ is an intangible attribute that is often based on perceptions. And inter-personal chemistry is an even more ethereal feature. Yet, more than the technical purchasing elements, Procurement’s success in the enterprise is deeply dependent on these factors; because it is people’s perceptions of us that determine how they react to what we say and do, and how successful we are at aligning them to our agenda and getting the results we want.

Interactions with stakeholders, wherein we shape their perceptions, typically involve some form of persuasion, whether we do it deliberately or not. And persuasion is a fundamental constituent of interpersonal dynamics. Aristotle’s teachings on communication and persuasion from over two millennia ago still hold true today. “The fool tells me his reasons. The wise man persuades me with my own,” the ancient Greek philosopher said. He explained that people are social animals by nature, and we are habitually invoked to persuade others or win them over for various reasons. He identified three different kinds of proof persuasive people use – and tomorrow we will look at what these are and what we need to do to adopt them.

Voices (17)

  1. Andrew Cox:


    Hopefully cream rises to the top and Van Gaal may yet get a trophy!


  2. Sigi Osagie:

    Thanks for your comments, Gerard.

    I’m pleased you too feel this is a valuable debate for the profession.

    It may be even more thought-provoking for us all when you consider “ethos, pathos and logos” in Part 2: !

    Sigi Osagie
    Author, “Procurement Mojo – Strengthening the Function and Raising Its Profile”
    (Visit to learn more!)

  3. Gerard Chick:

    This is one of the most interesting debates I have seen on a blog for some considerable time. Procurement needs for more of this. the politics of business and procurement often strive to convert the ‘plural conditional’ into the ‘single definitive’! You guys have raised the level of debate and thinking – the profession this. So thank you Pierre, Andrew, Sigi, Peter and Paul.

  4. Sigi Osagie:

    You raise many sensible points, Andrew. And I agree with the need to expand conventional thinking in the profession.

    Thanks for your valuable comments.

  5. Andrew Cox:


    At the risk of bemusing the audience further can I reply to your fulsome responses with a few comments that I believe may be relevant. Yow will notice from them that I agree with much of what you say, but fear that you may have misinterpreted my original comments, due no doubt to my poor turn of phrase.

    Anyway here goes:

    1. I have nothing against innovation or anyone challenging existing models, nor do I believe I said that. My comments below will show clearly that I am more than happy to challenge existing models/theories myself.

    2. My original comment was focused on my belief (contrary to Sigi’s position) that being able to correctly analyse the situation you are in, and make appropriate recommendations for the business as a buyer is more important than the ability to sell what you believe/know to stakeholders. I still think this is the correct way of thinking, even though I recognise that having the ability to sell what needs to be done to stakeholders is a real benefit.

    3. My second comment (and it is not a new one) is that, while I think analytical tools are more important than behavioural skills, I unfortunately believe Kraljic’s methodology is neither rigorous (i.e. it does not consider all of the variables that need to be analysed when making sourcing recommendations) nor is it fully robust (i.e. the internal logic of the recommendations made in the quadrants identified are not coherent and often lead to gross sourcing errors by those using this methodology).

    4. If I am correct about this, then anyone who uses this methodology (i.e. most academics, practitioners and consultants) is guilty of making the same errors, and if they then also choose to tamper with the variables that inform the x and y axes, and also fail to change the recommendations within the quadrants, we end up with ‘a dog’s breakfast’ analytically (i.e. nonsense built on very shaky foundations). Unfortunately my observation of the use of the flawed and misguided Kraljic methodology is more ‘dog’s breakfast’ rather than Cathedral! I have written fairly extensively about this in books and articles over the years, but a short summary (which also explains why the Purchasing Chessboard also lacks rigour and robustness) can be found @

    5. Having clarified what I was trying to say can I now say that, despite the fact that I appear unintentionally to have upset you, I am genuinely impressed by the range and depth of your thinking, even though the experience so far has been a bit like watching a large firework display go off!

    I do hope you will understand this later comment is not intended as a criticism, but genuine recognition of a fertile and lively mind clearly trying to get ideas across as quickly as possible.

    That said, can I say that while I agree with you that ‘supply’ is exactly what we should be focusing on I have a number of concerns with some of your comments that are briefly listed below:

    a) It would make no difference to the internal rigour or robustness of the Kraljic model even if you changed the axis to ‘Importance of Supply’ because the intellectual foundations and recommendations are in my view fundamentally flawed. There is insufficient space to fully explain why here but:
    b) The Kraljc model is a static, non-dynamic methodology and completely fails to address (except tangentially in its completely undeveloped 9 Box Power Matrix) the key issues in buyer and supplier exchange (namely the power resources available to both parties to achieve their goals). In other words it fails to address the issue of the ultimate purpose and goals of the firm/organisation and how its performance should be measured when it interacts with suppliers and vice versa!
    c) If ‘Supply’ is so important (and I agree that it is) why is your journal/blog site called Spend Matters? The gravest error in all current performance management thinking is the unrelenting focus in the profession on one KPI–cost savings. This has led directly to the development of ‘categories of spend’ rather than categories of supply’ thinking. Are you (i.e. ‘Spend Matters’ not you personally) part of the problem or the solution?
    d) Is it possible/sensible to manage supply issues from within a silo management based function (whether you call it Procurement, SCM or Purchasing)?
    e) How is the profession going to identify the best practice models, tools and theoretical approaches (i.e. what Peter calls the ‘professional body of knowledge) if there is no forum to debate the intellectual and practical rigour and robustness of particular models/theories? I ask this because over the last 20 years I have been trying to get such a debate going and have been met with a wall of indifference in the profession. In other words how do we overcome the problem of ‘regnant orthodoxy’ or what I prefer to call ‘the tyranny of the usual practice’?

    I am not certain this is the right forum for this discussion but if you only get the chance to have a chat with a few intelligent people each year it is worth it in my view–whatever disgruntled practitioners may think.


  6. Andrew Cox:


    I agree completely on the issue of the current lack of a professional body of knowledge about best practice, that is agreed upon but also continually tested and challenged by academics and practitioners.

    There is also the problem that many practitioners are often looking for short-cuts – i.e. simple tools that quickly tell them what to do. This is okay if the tools are rigorous and robust, but if they are intellectually and methodologically flawed in their reasoning then we have major problems, and especially if practitioners do not know how to think through these issues properly.

    The bane of the profession for me is the failure to recognise that professional and managerial competence is the understanding that tools are there to help us think about how to analyse problems and then understand the complexity of the choices we have to make.

    Nothing much has changed in the profession in this respect since I started working in it over 20 years ago!

  7. Sigi Osagie:

    Brilliant point, Paul – very well put. And very sensible observation by Peter too.

    Thanks to everyone for your comments so far.

  8. Paul Vincent:

    It is absolutely essential to have a healthy exchange of ideas Pierre (and Spend Matters does this well) I was just wondering aloud how this particular exchange might be interpreted by internal/clients and budget holders were they to read it.

    1. Peter Smith:

      It is a good point Paul – I think what it does is highlight the immaturity of our profession (and that isn’t an insult to anyone), but the fact is we don’t have a solid “body of knowledge” like some professions as yet. that incidentally is one reason why I oppose going too far on the “certification” idea (you are not allowed to buy without being CIPS). There is still a lot we need to work out before we absolutely “know” what top class procurement looks like! I think I would have been happy to put that argument to my boss when I was a CPO ,with the caveat that of course I personally had a better idea of what it looked like than most…!!

  9. Pierre:

    Thanks Paul, I’d call it a healthy exchange of ideas rather than an academic debate! 🙂 I’m not an ‘academic’ anyway, and labels are silly anyway. There’s always a risk of showing too much detail though, especially in public. On the flip side, debate is healthy and can create insight, especially if you question well accepted dogma that can be very damaging (e.g., cost avoidance doesn’t really matter).
    I usually try to pick out bite-sized ideas, practices, and cautionary tales (e.g., using spend size only to segment on the y-axis – which leads you to miss truly ‘critical’ items/services in a risk management program) to be more easily consumable. Also, all the points we make actually have very specific impacts on practitioners who are trying to transform their organizations and themselves. There’s about 20 of them in this post. Maybe a follow-up post is needed… or not.

    Andrew makes the point of not ‘bringing a 2×2 knife to a complex gunfight’. Sigi’s makes the point that attitude and inter-personal skills are as important to technical skills. I see it in the data and in real life talking to folks. I’ve also run many internal procurement cust sat studies. Typical feedback: “Procurement are great negotiators, but TERRIBLE communicators!” I make a lot of points (too many I know, sorry), but one is that it is GOOD to tailor the tools like Kraljic if it helps stakeholders understand and it gets the job done. I know a large chemicals firm who uses DMAIC rather than the n-step sourcing methodology. Other firms who collaborate with Marketing use the word ‘investment’ instead of ‘spend’ like they do. “Mass customizing” your procurement services and tools is absolutely as much a best practice in internal services delivery as it is in the physical product supply chain.

    I always applaud when practitioners like Sigi push the envelope to create new insight. I think the benefits will always outweigh the risks. Bravo Sigi! You are welcome on our sites any time. And I’m ordering your book this weekend!

  10. Paul Vincent:

    I hesitated about joining in this debate given that it seems to have become a bit of an academic contest but but my general point is very relevant. I just wonder how valuable these types of (obviously intellectually well intentioned) exchanges are if read by internal stakeholders who are judging the influence and impact of procurement professionals (as we ultimately should be judged in my view) on our level and breadth of business acumen. The trouble with this kind of debate is that you can inadvertently imply to stakeholders that we do not live in the land of THEIR business realities and that doesn’t advance the ‘profession’ at all.

  11. Andrew Cox:


    I do not disagree with your general view that navigating organisational dynamics is a key requirement of success.

    My real concern is that unless you have a robust and rigorous analysis in place of the actual situation facing the organisation, as well as a clear understanding of how you are able to assist senior managers with their (rather than your own) problems, it really does not matter whether you have good inter-personal skills, or not.

    Often we see individuals who are able ‘to play the game of internal politics’ very well, but when it comes down to it they have nothing to contribute. This is because they do not understand the circumstances they are in sufficiently well enough (or the full range of options available to them) to be able to provide a game changing intervention.

    This is why I felt the need to respond to your blog. In the end, for me, it is all about whether something is a sufficient or necessary condition for success. I think your view points to a necessary condition, but it is not in my view the sufficient condition.

    Best of luck with your sales!



  12. Sigi Osagie:

    It’s great to see such passionate exchanges. Debate is healthy, and good for our individual and collective growth.

    Your comments are very welcome. And, indeed, add valuable contribution to expanding Procurement practitioners’ thinking and knowledge. Thanks a lot.

    I could have used any other technical purchasing tool / methodology, rather than the Kraljic model. And, perhaps, we’d have seen comments that are just as passionate.

    In the end, irrespective of the tool / methodology referred to, in my experience of establishing and revamping Procurement functions, success is more dependent on our abilities to navigate organisational dynamics. And persuasive communication is a vital aspect of that.

    I’d love to hear / read your further views.

    Sigi Osagie
    Author, “Procurement Mojo – Strengthening the Function and Raising Its Profile”
    (Visit to learn more!)

  13. Pierre Mitchell:

    Thanks Andrew,
    I actually did read your paper, and I really didn’t want to critique it, and I don’t have enough space to do so. The paper covers so much ground in scope, but you co-mingle (and don’t drill down) into so many concepts, especially related to “world class” and benchmarking and how it relates to Kraljic, that I’m not sure where to begin.

    First, may I can get you a log-in to our PRO site and you can check out our multiple series on value measurement and benchmarking (e.g., performance vs. capability benchmarking), but also check out this research/paper I did for CIPSA which might help:

    It’s about looking at procurement not as a functional department, but a portfolio of supply management processes (more on this later), or, rather, “services” and the associated service lines/segments like you’d see in any professional services firm. Those supply management services help the firm define, execute, and improve the ‘balanced scorecard of supply’ important for those stakeholders on the demand side and for the categories and suppliers (‘many-to-many’ relationship here) on the supply side. Those supply management services have KPIs (e.g., internal cust sat of procurement group) and the supply itself has balanced supply performance objectives/KPIs. Of course, the supply environment and value chain structure will also determine not just the supply impact/performance (at a category level), but the causal factors that affect the performance. Some you can control – some you can’t – and everything in between. If there’s more “complexity”, the more risk factors there are, and the more specific supply management processes/practices/tools/techniques (that demonstrate ‘capability’) you’ll need as you work cross-functionally to manage [the performance of] supply. This is the essence of Kraljic.

    Anyway, let me address your specific points:

    I actually did cite one of the actual axes and highly recommend that practitioners check out the original text. Here is a link to a version:

    You say that you are not in favor of “individuals using models in ways that were not intended by those who developed them.” Really? First, since when does a creator of a 2×2 have a divine right not to allow anyone to adapt it, extend it, improve it, etc. How do you think innovation happens?! Is because you think we’re not worthy to do so, because only the high priests are allowed to translate the original text? Is it blasphemous to adapt the model? Do I need a ‘license to practice’ (wink to Peter)?

    As Kraljic said in a supplybusiness interview: “My colleagues developed it further and experimented with a nine-box version that allowed more flexibility. But always it must be adapted to the characteristics of the company where it is being used.” When it came to public consumption, the simplicity of the 2×2 original won the day.

    I do agree that if the model is both dumbed down (e.g., y-axis interpreted as spend magnitude rather than business impact) and cited as the original model/intent, that is indeed wrong. But, if we adapt it, and it provides new insight, is that so bad? So, for example, I can adapt it to supply risk. And risk factored heavily into Kraljic’s thinking. You can view the X-axis is a composite risk probability index that looks at not just the 5-forces stuff around strategic supply options, but also includes commodity volatility, product/component portfolio complexity, supply network complexity (number of nodes, PESTLE factors, etc.). The more the number of moving ‘bits’ (broadly), the more things that can go wrong – more causal factors that can impact the ‘balanced scorecard’ of supply on the y-axis. You can do reduce some of those probabilities through complexity reduction efforts (e.g., Motorola’s efforts a decade ago), and some you just have to deal with through highly tailored strategies as you mention. But I’ve seen so many companies who’ve been experienced death-by-powerpoint as consultants generate N*(N-1) 2×2’s with N being the number of segmentation factors to consider. People lose the focus. As Kraljic said: “The original idea is like a Romanesque church. It has clear structure and focus. But if you develop it too much it becomes Rococo and because of all the additional features you don’t see the church any more”

    I promised to return to Y-axis, and the heretic in me will put it out there: I think it’s mislabeled and I think Kraljic missed (or at understated) a key nuance on his masterpiece. I don’t think it should be “Importance of Purchasing”, but rather, “Importance of Supply” (or ‘impact of supply’), and by segmenting supply, then you can segment/tailor your supply management processes (i.e., cross-functional and cross-lifecycle management of supply – of which category management is a merely a subset oriented around the category). This interpretation is actually in fact not heretical, but rather how most interpret it (although too narrowly by equating impact/importance only with spend magnitude). Kraljic should have been more forceful and clear that we’re not talking about renaming a function, but radically broadening its scope to help the firm define and optimize ‘supply’ (e.g., safely tapping supply markets for innovation and competitive advantage) and inbound value chain, regardless of where the resources reside. He touches on it here and there, but doesn’t drive it home.

    More broadly, everything that we can do to experiment and apply metaphors, frameworks, methodologies, techniques, and tools from different bodies of knowledge is fair game. I wrote about this here:
    Whether it’s social sciences as you mention (e.g., behaviorial psychology is a great one), or complexity theory, or innovation techniques, or AI, or mathematical optimization, or mythology, or cultural re-engineering, etc., it is our duty (and especially your duty in academia!) to welcome new ideas and to advance the art and science of supply management (let’s table art vs. science as a separate discussion!). Why NOT democratize it? Why NOT creatively destroy it? The innovation won’t just come from the old guard and the status quo.

    My ‘breath of kindness” comment that you characterize as my apparently naïve enthusiasm to plod along and randomly tamper and twiddle with well accepted practices (which many are completely wrong anyway) is misguided on many levels. First, you have little idea what I’ve done in the past (and I won’t puff my peacock feathers here) in terms of analytic rigor, or practical relevance, so please don’t judge my knowledge (or others) without knowing what we know – you know? Nor do I know what you know. I’m sure it’s impressive and I’d love to compare notes and collaborate. I think we could learn from each other. And we can agree that weak thinking is bad and snake oil is even worse. But let’s respect each other and welcome each other’s ideas – no matter where we harken from. BTW, the quote is actually a George Eliot quote: “A friend is one to whom one may pour out the contents of one’s heart, chaff and grain together, knowing that gentle hands will take and sift it, keep what is worth keeping, and with a breath of kindness, blow the rest away.” It was printed on the front of the printed program at my wedding (20 years next September). I generally look to create a broader pie of value and share in the rewards – aka there IS a win win – and I’ll get back to that favorite topic of yours in another post.

    So, we might not be friends (yet), but maybe we can share some grains with each other and with the bemused readers.

  14. Andrew Cox:

    Pierre ,

    Nothing against someone reading Aristotle (or anyone else for that matter), and especially if they can come up with robust and rigorous analytic and practical models to assist practitioners.

    In fact I used to teach Political Philosophy myself, and much of my own thinking on power and leverage comes from social science theories that are simply not well enough understood or taught within the procurement profession.

    What I am not in favour of, however, is individuals using models in ways that were not intended by those who developed them. Your own examples make this point.

    Indeed, you have also failed to cite what Kraljic actually used as the 2 variables on both axis and why this was important in his approach. Too many consultants and practitioners change the variables used on each axis (usually so they do not have to mention the originator) but then keep the original recommendations from the original matrix.

    For example, Kraljic originally used ‘market difficulty’ as one of his analytical variables. This may have a relationship with ‘risk’, but the two variables are not equivalent. Changing from one to the other as the key variable to be analysed has serious consequences analytically, and especially if individuals use the same original recommendations for action in the matrix (which they always do)!

    Other problems we see are people taking a particular model (which they clearly do not fully understand) and then simplifying it so it becomes meaningless. For example, we us over 100 variables to analyse buyer and supplier power before making recommendations for action. Amazingly, we have seen some practitioners using only 4 or 5 analytic variables to position within the power matrix! This is in my view nonsense for effective positioning before making recommendations for action.

    Until practitioners understand that any model they use must be rigorous and robust in its internal logic and recommendations, we will continue to see the high levels of sub-optimal practice that is endemic throughout the profession.

    You will also no doubt understand from this why it is that I do not share your enthusiasm for the current ‘theoretical and analytical relativism’ (i.e. let’s use the best bits from any model even though we don’t fully understand the consequences of doing so analytically or practically) of the thinking) that is endemic in the profession.

    Many models have been created but most of them (not least Kraljic) suffer from a lack of rigour and robustness analytically. Once again can I suggest you read our White Paper: Beyond Kraljic @

  15. Pierre Mitchell:

    Andrew, there’s a lot of great aspects of Kraljic, but the problem is that people take it too literally, like some divine and untouchable manuscript. We shouldn’t throw it out, but like the mechanic, we should be able to use that toolbox to fix different problems in different types of cars.
    Too many purists complain when the divine quadrant is tailored and expanded upon. I think it’s an excellent framework for risk (complexity as a good proxy for risk if you frame it right) vs. reward (overall business impact related to the spend). Also, too many folks have implemented it more narrowly than it was written for different reasons. The Y axis is ‘importance of purchasing’. It’s a bad label and really is about ‘importance of [particular] spend’. So, people adapt it in all sorts of ways. Do an image search on it and you’ll see the variation. This variation and all the 3D and derivative 2D models you can do off it (and I’ve seen them all – including yours) is terrific! But, let’s first try to understand what others have done to expand our knowledge (like Aristotle), and use what is useful for us, and to develop new frameworks and tools where they don’t exist before.

    This is like religion. We all feel some need to have a divine right to our favorite prophet, holy book, local church, and local interpretations on what is right and holy – and we’ll kill each other because when others don’t like our little take on the whole thing – even when we’re all really trying to get to the same place.
    I find that the best companies don’t ego-attach to any one particular approach or model, but rather, take what’s good in any model, such as the models that come from outside procurement (god forbid!) and take what’s good, and with a breath of kindness, blow the rest away.

  16. Andrew Cox:

    Nobody could disagree with your view that inter-personal skills are essential in successful managers (whether buyers or not). However the Kraljic model is so simplistic and wrong headed that a better analogy would be that you would not go to a mechanic who used a diagnostic tool that was flawed and provided misguided diagnostics and recommendations for action (whether they were rude or not)! In fact I would rather go to a rude analyst with the right diagnostic tools than the other way around. I suggest you l read our White Paper: Beyond Kraljic @

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