A New Lens for Supplier Segmentation in 2025

Few tools in procurement have achieved the iconic status of the Kraljic Matrix. Since Peter Kraljic’s groundbreaking 1983 Harvard Business Review article, the 2×2 segmentation model has guided procurement teams worldwide in moving from reactive purchasing to strategic supply management.

By mapping categories along two axes — profit impact and supply risk — Kraljic enabled organisations to classify suppliers into four archetypes: Non-Critical, Leverage, Bottleneck, and Strategic. This framework gave procurement a common language, and for decades it has influenced how companies allocate resources, manage supplier relationships, and balance risk and value.

Its practical impact has been immense. In automotive, it informed make-or-buy decisions for critical engine components. In FMCG, it shaped packaging and raw material strategies to balance innovation with efficiency. In energy, it guided long-term contracts for infrastructure-intensive projects. For many organisations, the Kraljic Matrix was the foundation for structured category management and the rise of Supplier Relationship Management (SRM).

At first glance, the Strategic Value Matrix™ may appear structurally similar to the original Kraljic Matrix — both are 2×2 models that produce four high-level supplier segments. The similarity ends there. The new model replaces profit impact and supply risk with Capability Maturity and Strategic Value Contribution, broadening the lens to include cost efficiency, operational and digital readiness, sustainability, risk resilience, and innovation. This creates a forward-looking, data-driven segmentation that reflects the multi-dimensional value drivers shaping supplier relationships in 2025.

Why the Original Axes No Longer Capture Today’s Reality

While the Kraljic Matrix remains a landmark, the business environment it was designed for has changed profoundly.

The original profit impact axis assumes that cost and margin influence are the primary measures of value. The supply risk axis assumes that the greatest threat is delivery disruption. These assumptions, while still relevant, now overlook the multi-dimensional drivers of competitive advantage and corporate resilience.

What has changed:

1. Innovation as a primary growth lever – Suppliers can be market differentiators, driving new products, services, and business models.
2. Sustainability as a licence to operate – ESG maturity now affects investor trust, customer loyalty, and regulatory compliance.
3. Digital readiness as an enabler – Integration, data quality, and process automation are now critical to speed, transparency, and resilience.
4. Operational readiness and execution – Suppliers must be able to scale, adapt, and deliver flawlessly under volatile conditions.
5. Risk as a multi-dimensional challenge – Geopolitical, climate, cyber, and reputational risks all influence supplier value.
6. Cost in context – Price still matters, but total cost of ownership, lifecycle economics, and value creation take precedence over unit price.

The procurement leader’s challenge in 2025 is not just to protect supply and optimise cost, but to build a supplier ecosystem that enables growth, sustainability, innovation, and resilience simultaneously.

Introducing the Strategic Value Matrix™

The Strategic Value Matrix™ is a modern supplier segmentation framework that reflects these realities.

Instead of the original Kraljic axes, it uses:

• X-axis: Capability Maturity(Composite score of Cost, Operational Readiness & Execution, and Digital Readiness)→ Measures how well a supplier can deliver today, at the right cost, with operational reliability and digital integration.
• Y-axis: Strategic Value Contribution(Composite score of Sustainability & Environment, Risk, and Innovation)→ Measures how much a supplier can contribute to future resilience, compliance, and competitive advantage.

These composite scores are calculated through a Tier 2 scoring system that assesses each of the six domains individually (scored 1–5, weighted to strategic priorities). The result is a data-backed position in the main matrix, showing which suppliers deserve which type of strategic attention.

	Low Capability	High Capability
High Value	🟣 Mission Specialists   High potential, low current maturity – develop, incubate, and scale	🔵 Future Shapers   High potential, high maturity – co-create, integrate, and invest for the long term
Low Value	⚫ Transactional Utility   Low maturity, low strategic importance – automate, consolidate, or exit	🟡 Efficient Executors   High maturity, low strategic upside – standardise, optimise, and contain cost

At first glance, the Strategic Value Matrix™ may appear structurally similar to the original Kraljic Matrix — both are 2×2 models that produce four high-level supplier segments. The similarity ends there.

The placement logic is fundamentally different: instead of relying on profit impact and supply risk, the new model maps suppliers based on Capability Maturity (a composite of cost competitiveness, operational readiness, and digital integration) and Strategic Value Contribution (a composite of sustainability, risk resilience, and innovation potential). This shift changes both the inputs and the strategic implications of each quadrant. Where Kraljic’s framework largely reflects a supplier’s current cost and risk profile, the Strategic Value Matrix™ offers a data-driven, weighted scoring approach that incorporates ESG performance, digital maturity, and innovation capacity — factors essential to competitive advantage in today’s business environment.

The result is a more precise, forward-looking segmentation that not only identifies where a supplier is today, but also where they could move with targeted development, enabling more dynamic and future-proof relationship strategies.

Why This Matters — and For Whom

This approach adds value for:

• CPOs & Procurement Leaders→ Enables fact-based portfolio governance, linking supplier strategy directly to corporate objectives.
• Category Managers→ Identifies which suppliers warrant deep SRM, innovation programs, or sustainability partnerships.
• Sustainability & Innovation Officers→ Prioritises which suppliers can accelerate ESG targets and innovation pipelines.
• Risk & Compliance Teams→ Clearly shows where risk mitigation or resilience-building is most urgent.

Because the model is scoring-based, it doesn’t just categorise — it prioritises.
By looking at where a supplier sits in the Capability Maturity × Strategic Value Contribution matrix, teams immediately see where the attention needs to go:

• Invest in Future Shapers
• Develop Mission Specialists
• Optimise Efficient Executors
• Automate or Exit Transactional Utilities

Why We Need This Now

Procurement’s role is no longer limited to cost guardianship and risk minimisation.
Boards, regulators, customers, and employees expect procurement to drive growth, deliver sustainability impact, and enable innovation at speed — all while ensuring resilience and efficiency.

The Strategic Value Matrix™ recognises that:

• Value creation is multi-dimensional.
• Supplier segmentation must reflect what drives the business today and tomorrow.
• Decisions must be grounded in objective, weighted scoring, not only gut feel.

By bringing together all six domains — Cost, Operational Readiness & Execution, Digital Readiness, Sustainability & Environment, Risk, and Innovation — procurement leaders can finally see the full picture, and act with precision.

Want to learn more?

• click here to read more about the workings of the Matrix
• download the info pack here (link will appear as soon as the info pack is ready)
• or contact us at hello@leadersofthenewschool.nl

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PS – Important Note:
The Strategic Value Matrix™ is an evolution inspired by the foundational work of Peter Kraljic. We recognise and respect the intellectual property rights associated with the original Kraljic Matrix and its immense contribution to procurement thinking. This updated model is not intended to replace or replicate proprietary frameworks, but to build on their legacy by integrating additional dimensions relevant to the modern business environment. All trademarks and copyrights remain the property of their respective owners.