3rd Asia Pacific International Conference on Industrial Engineering and Operations Management

Integration of Kraljic's Portfolio Model and Purchasing Price Assessment-DEA in Improving Procurement Efficiency

0 Paper Citations
Track: Supply Chain and Logisitcs Competition

The object of research is one of the companies engaged in aircraft catering using a variety of raw materials. Currently, the procurement department considers that all raw materials are routine raw materials, so the procurement process is carried out repeatedly by suppliers at the lowest prices without entering into contracts or cooperation (regular purchasing). In the absence of contract management, companies lose the opportunity to improve supplier compliance and negotiate price reductions. The decline in supplier performance is also a problem faced, but the procurement department has not assessed supplier performance. With these problems, it is necessary to evaluate the ongoing procurement strategy to improve the efficiency of the procurement process. This study aims to develop recommendations for procurement strategies that include relationships with suppliers and company internal policies. In this study, the preparation of procurement strategy recommendations was taken based on the results of Kraljic's Purchasing Portfolio Model (KPM) which was used to differentiate each raw material based on the level of supply risk and the effect of each raw material on company profits, and the results of the Purchasing Price Assessment–DEA (PPA-DEA) in the category of leveraged goods related to the level of efficiency in purchasing goods. KPM shows that: the group of ingredients for milk, eggs, jam, and chocolate is strategic; dyes, yeast, and coconut milk are classified as bottlenecks; flour and sugar are classified as leverage; oil, packaging, mineral water, utilities, and plastics are classified as non-critical.

Published in: 3rd Asia Pacific International Conference on Industrial Engineering and Operations Management, Johor Bahru, Malaysia

Publisher: IEOM Society International
Date of Conference: September 13-15, 2022

ISBN: 978-1-7923-9162-0
ISSN/E-ISSN: 2169-8767