Extending the Kraljic Purchasing Portfolio Model: Integrating Sustainability Risks to Advance Sustainable Purchasing and Supply Management

Abstract

The Kraljic Purchasing Portfolio Model (KPPM) remains a widely adopted framework for strategic sourcing decisions. However, it has faced criticism for oversimplifying procurement realities by using only two dimensions—profit impact and supply risk—without considering broader social and environmental concerns. This paper addresses these limitations by proposing an extension of the traditional KPPM to include a third dimension: sustainability risk. Grounded in the principles of Sustainable Purchasing and Supply Management (SPSM), this model incorporates environmental, social, and governance (ESG) factors into portfolio analysis, aligning procurement practices with contemporary regulatory requirements and stakeholder expectations. The study reviews key theoretical developments in sustainable supply chain management and outlines procurement strategies adapted to this three-dimensional model. The findings highlight the importance of integrating sustainability considerations into supplier segmentation, especially in sectors like construction where compliance with international sustainability standards is increasingly imperative. This framework provides actionable insights for procurement professionals to operationalize sustainability objectives in tactical sourcing decisions.