Application of a Purchasing Portfolio Model in a Construction Company in Two Distinct Markets

Abstract

The Kraljic purchasing portfolio matrix (KPM), which is based on the dimensions of strategic impact (SI) and supply market complexity (SMC), is a valuable instrument for defining purchasing strategies. This paper combines action research with a single case study to apply the KPM, which was developed at the head offices of a multinational construction company, in two branches located in markets with different characteristics. The application makes use of analytical hierarchical process techniques for criteria prioritization and employs direct measurement for criterion rating and multidimensional scaling to pinpoint the items in the KPM. The results, on one hand, confirm KPM as a valuable tool to support the development of purchasing strategies in the construction industry; on the other hand, they align with the expected behavior of a company in emerging markets, which tend to be more conservative than more mature markets in relation to supply risk management.