Procurement professionals use the Kraljic matrix to assess the risk of acquiring products from new suppliers who enter the supply network (Montgomery et al., 2018, p. 198). It assists the firm in determining appropriate suppliers to collaborate with to meet its objectives and keep operations operating smoothly. The Kraljic matrix of the Coca-Cola Company is presented in the table below.
| NOT IMPORTANT ITEMS
several providers Pressure from competitors simple replacement Low potential for value addition. |
IMPACT ITEMS
Several vendors Optimum value suppliers specific differences in specs React to price fluctuations. |
| TACTICAL ITEMS
essential to competitive advantage sustainable, profitable growth. Problems with replacement unique requirements |
BUCKLENECK THINGS
a few vendors Regulatory specifications Service and product difficulties Low potential for value addition. |
The above Kraljic matrix table depicts the Coca-Cola Company’s buying strategy. In addition to optimizing procurement opportunities, the method promotes long-term relationships with a diversified group of suppliers or partners. The company’s supply chain is made up of many different providers. The Coca-Cola Company has significant negotiating power in price talks since it may get raw materials from various sources. For strategic purchasing, The Coca-Cola Company employs a multisourcing strategy or a variety of multiple suppliers. The company acquires things from several merchants (Wu et al., 2019, p. 658). Most suppliers are located near the company’s supply hubs despite their worldwide reach. Because the firm has a lot of influence on the price of its raw materials, it may make sensible purchases. In other words, since the Coca-Cola Company has so many suppliers, it has more negotiation leverage regarding raw material prices. This is one of the major benefits of using many sources. It is also vital to place supply hubs near the headwaters of supplies. As a consequence, the firm will save money and time on transportation. Industries strive to get raw materials as soon as feasible to minimize disruptions in the supply chain.
The Coca-Cola Company’s buying goals include maintaining relationships with suppliers, cutting procurement costs, reducing risk and strengthening supply chain security, using technology, generating innovative ideas, and improving product quality. Coca-Cola’s effort involves local buying. The bulk of the firm’s raw ingredients is purchased from local bottling partners. Examples include carbon dioxide, sugar, water, and sweeteners. The proximity of supply sites to local suppliers assists the business in ensuring that the supply chain operates smoothly. The company no longer has to import supplies from all over the world, which would have necessitated expensive shipping.
The Coca-Cola Company has the best buying strategy, and there is no need to change it now. Using many service providers and buying items close to home is both advantageous and efficient. The organization benefits when the proper suppliers deliver the right resources in the correct amount, quality, and price. Because raw material costs determine final product pricing and the company’s competitive advantage, it is vital to find them at competitive prices. It also meets a variety of product needs and reduces supply chain risks. To keep its competitive edge, The Coca-Cola Company should keep its current procurement strategy, which is working well.
References
Montgomery, R.T., Ogden, J.A. and Boehmke, B.C., 2018. A quantified Kraljic Portfolio Matrix: Using decision analysis for strategic purchasing. Journal of Purchasing and Supply Management, 24(3), pp.192-203.
Wu, J., Wang, H. and Shang, J., 2019. Multi-sourcing and information sharing under competition and supply uncertainty. European Journal of Operational Research, (2), pp.658-671
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