Low risk, high value items are typically managed using which strategy?

Low risk, high value items are typically managed using which strategy?

• A. Non-Critical
• B. Leverage
• C. Bottleneck
• D. Strategic

Answer: (B)

In procurement, items are often analyzed with the Kraljic portfolio matrix, which pairs value impact with supply risk to decide the best approach. When something has high value to the business but low supply risk—meaning there are many reliable suppliers and competition isn’t tight—the best move is to use a leverage strategy. The idea is to maximize financial returns by using your purchasing power: negotiate lower prices, favorable payment terms, longer-term contracts, and perhaps dual sourcing to ensure you get the best terms because the supply risk is low and the value is high. The other quadrants don’t fit this scenario: non-critical items are low value and easy to source, bottleneck items have high risk despite lower value, and strategic items are high in both value and risk and require close supplier collaboration and risk mitigation. So, for low risk but high value, leveraging your buying power is the most effective approach.

In procurement, items are often analyzed with the Kraljic portfolio matrix, which pairs value impact with supply risk to decide the best approach. When something has high value to the business but low supply risk—meaning there are many reliable suppliers and competition isn’t tight—the best move is to use a leverage strategy. The idea is to maximize financial returns by using your purchasing power: negotiate lower prices, favorable payment terms, longer-term contracts, and perhaps dual sourcing to ensure you get the best terms because the supply risk is low and the value is high.

The other quadrants don’t fit this scenario: non-critical items are low value and easy to source, bottleneck items have high risk despite lower value, and strategic items are high in both value and risk and require close supplier collaboration and risk mitigation. So, for low risk but high value, leveraging your buying power is the most effective approach.