The purpose of this paper is to examine how to align purchasing portfolio management with sourcing negotiation styles.
The authors have adopted two-step field tests: a case study; and a follow-up experimental test with 77 sourcing professionals.
The authors note that Kraljic Portfolio Matrix (KPM) provides a valuable guide for determining sourcing negotiation styles (i.e. competitive negotiation for leverage items, collaborative negotiation for strategic items and accommodative negotiation for bottleneck items). Interestingly, effective buyers adopt right negotiation styles based on the switching costs of changing suppliers, the dependence level on specific suppliers and the availability of alternative suppliers.
This study shows that aligning purchasing portfolio management with sourcing negotiation styles improves the chances of effective buying outcomes. Practical implications suggest that successful buyers move beyond interpreting generic predictions of the KPM framework and rather implement specific negotiation styles to maximize the potential benefits of purchasing portfolio management.
