Development of a purchasing portfolio model for the construction industry: an empirical study

Abstract

Purchasing is one of the core activities of most industries and performance in this area directly impacts the overall performance of a company. The purchasing portfolio model used in this paper, based on the Kraljic approach, assumes a relevant role in defining purchasing strategies, although its application in the construction industry has been limited or undocumented. This research is exploratory in nature, with the methodology based on action research combined with a single empirical study in a large Portuguese multinational construction company. The AHP technique was used for criteria prioritisation in both dimensions and direct measurement employed for rating construction item classes. A multidimensional scaling approach was employed to place the items in the purchasing portfolio matrix. Through the development for, and application of the model to a construction company, this study aims to contribute to expanding the domain of applicability of purchasing portfolio models. The results of the application confirmed the value of the model in helping to define construction company purchasing strategy and gave guidelines for its application.

Keywords:

• purchasing portfolio
• Kraljic’s matrix
• Analytical Hierarchy Process
• construction industry