Unlucky No. 13 – Another Procurement Myth Debunked

Pierre Mitchell was back this week to debunk another top procurement myth over on Chief Procurement OfficerThis week we hit No. 13 on our list of 25+ procurement myths we think need to be discussed. The myth? The thought that using the Kraljic Model should be applied to define and manage spend categories. Read the full article here: Apply the Kraljic Model to Spend Category Management: Procurement Myth No. 13.

Pierre writes:

"On the demand side over the supply chain, massively sophisticated customer-facing analytics working on “big data” allow firms to micro-segment their demand and customer bases based on hundreds of variables to gain a competitive advantage by personalizing product offerings and serving them up in real time – and making sure the supply chain can support this omni-channel model to the consumer. Yet, when you look at how well companies can perform that same approach to the supply side, the majority of procurement organizations are still stuck in the most rudimentary of segmentation models.

...If you are going to mass customize your procurement processes based on the highly multi-variant nature of the spend categories (i.e., not just 2 variables), you need to evolve your segmentation techniques and then have good processes and technology that can manage this more dynamic and granularly segmented spend that drives targeted activities (beyond sourcing) to extract more value from supply."

Head on over to our CPO website to check out the full article as well as our other 12 myths we already tackled.

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First Voice

  1. Matthew Miller:

    The Kraljic model is an excellent starting point to narrow the effort, but probably relies too heavily on judgement and opinions rather than data. To your point, now that the research tools are available in consumer friendly packages it is low hanging fruit to improve the supply chain.

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