Portfolio Model Supporting Development of Purchasing Strategies a Case Study Concerning Raw Materials at Casco Adhesives (Management Project)

Casco Adhesives develop, produce, market and distribute adhesives and adhesive equipment with the mission to increase the competitive strength of their customers by offering products at the leading edge of technology and with environmental awareness.

To fulfil this mission high demand is set on every function of the company, not at least the purchasing function. It is important that the function is involved at an early stage since the purchased material for an adhesive represents a grand part of its final value and a lot can be gained from considering alternative materials early on etc.

Naturally different strategies are appropriate for different purchases, to know what strategy that is most suitable can however be hard. Therefore a portfolio model was created in this thesis for supporting development of purchasing strategies for raw material.

The portfolio model was created in two steps that had to be performed in a sequential order. First a classification tool was formed where the purchased raw materials could be positioned into a purchasing portfolio matrix. The two dimensions of the matrix described the importance of purchase and supply risk. To further adapt the tool four steps were worked through. To begin with factors describing each dimension were selected through investigation and analysis.

The classification tool was supposed to consider aspects affecting a purchase and investigated further were thus the purchasing function, R&D and some parts of production. Thereafter answers to the factors were sorted out and given rates, relative weights and the critical borders were settled. The classification tool could finally be brought together and used to depict raw materials into the four quadrants; strategic, bottleneck, leverage and non-critical items of the matrix.

The classification tool could not be too complicated to use why all aspects affecting a purchase was impossible to cover in this step. Therefore a second step was to design a strategy template containing further information needed for developing a suitable strategy. The template enhanced questions concerning the raw material, the supplier market, the actual purchase etc. However depending on which quadrant the raw material was classified in different information was requested.

Hence a lot of inspiration to what topics to include in the template had to come from the main task of each quadrant. Nevertheless information also came from the classification tool, portfolio literature and Casco Adhesives’ line of business. Finally the two steps were brought together into a complete portfolio and the result was achieved; a portfolio model supporting development of purchasing strategies for raw materials at Casco Adhesives.
Source: Linköping University
Authors: Roos, Malin | Rydman, Linda

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