Purchasing category management: Portfolio management, sourcing levers and strategy formulation

This paper provides a comprehensive review and benchmark of category management in procurement. Despite its widespread use as a strategic sourcing approach, the theoretical foundation and real-world application of category management remain insufficiently aligned. The study first reviews the existing literature on category strategy formation, purchasing portfolio models, and sourcing levers. It then compares these concepts to practice applications, based on an analysis of the category management processes of 17 leading firms. The findings confirm the continued dominance of the Kraljič matrix but also reveal a growing interest in systematic lever frameworks as an emerging best practice, bridging the gap between category strategy formulation and implementation in supplier selection and contracting. Conceptually, the distinction between category strategy (and sourcing category portfolios), sourcing levers (and systematic lever analysis models) and supplier tactics (and supplier portfolio models) as distinct but interconnected elements of category management is emphasised. By synthesizing theory and practice, this study identifies a generic category strategy process, outlines key tools, and highlights emerging best practices, thereby bridging the gap between strategic intent and execution in category management. • Complete purchasing academic literature review and detailing of more than 41 portfolio models proposed for the category strategy. • A standard category strategy process has common elements in practice, such as internal and external analysis. • The dimensions used in the Kraljič matrix vary between companies and contribute to the communication across procurement and business objectives. • Sourcing levers deploy strategy to actions, and empirical knowledge from buyers in the interviews extended the knowledge in the literature. • Best practice involves defining priorities with the business, systematically applying the sourcing lever's analysis, and working in yearly cycles.