Which of the following will be the most appropriate managing approach to procure these items?

British Steel needs to source a set of instruments that will improve quality of steel. Without these instruments British Steel will loss control of the temperature. The bucket may freeze up, or if it is too hot it leaks out of the casting process, damaging the machine. There is limited supply on the market and quality varies greatly.

Which of the following will be the most appropriate managing approach to procure these items?
A . Bundle these instruments into larger contract
B . Leverage market competition to drive down cost
C . Seek continuity of supply
D . Form partnership with supplier

View Answer

Answer: D

Explanation:

The instrument plays a crucial role in steel manufacturing because it presents in the majority of products, in which case lacking this instrument would have significant impact on the organisation’s output (production lines stop or damaging other machine). Otherwise, the risk of supply is high because there is limitation in supply. Therefore, it is considered as a strategic item in term of Kraljic’s portfolio matrix. Procurement manager should form partnership with suppliers to maximise the value.

The following graph illustrates Kraljic’s portfolio matrix:

Reference: CIPS Study guide page 84.

LO 2, AC 2.1