Supply Positioning: A Case Study Example

Context

This case study is based on practical implementation guidance shared during Health Procurement Africa’s (HPA) Ask the Expert webinar on supply positioning. The session presented an applied approach from Kenya, delivered by an HPA procurement expert, illustrating how public-sector health procurement teams can undertake supply positioning.

View the full Ask The Expert recording here.

Introduction

Supply positioning is a strategic procurement tool used to assess purchased goods and services according to their relative value and supply risk. Commonly associated with the Kraljic Matrix, it enables organisations to determine appropriate sourcing strategies and allocate resources proportionately.
The model categorises procurement into four quadrants based on two dimensions: profit impact (or spend value) and supply risk. Whilst conceptually straightforward, effective implementation requires structured data, stakeholder engagement and objective scoring to reduce bias.
This case study outlines the development of a supply positioning exercise and demonstrates its practical application within a healthcare procurement environment.

The Supply Positioning Framework

Supply positioning evaluates procurement categories against two key dimensions: profit impact / spend value and supply risk.

	High Supply Risk	Low Supply Risk
High Spend / Impact	Strategic	Leverage
Low Spend / Impact	Bottleneck	Non-Critical

Each quadrant requires a distinct management approach: Strategic (partnership-based), Leverage (competitive sourcing), Bottleneck (risk mitigation) and Non-Critical (process efficiency).

Developing the Supply Positioning Exercise

A structured approach involves three stages: data preparation, objective scoring and strategic alignment.

Data Preparation

Baseline data should include annual spend by category, supplier market structure, lead times, switching costs, clinical or operational criticality and the impact of stockouts.

Objective Scoring

To reduce bias, quantitative scoring can be applied using a 1–3 scale.

Demand-Side Considerations

Factor	High (3)	Medium (2)	Low (1)
Criticality to patient care	Life-saving	Important	Non-essential
Annual spend	Significant	Moderate	Low
Population reach	Wide	Targeted	Limited
Reputational impact of stockout	Severe	Moderate	Minimal

Supply-Side Considerations

Factor	High Risk (3)	Medium (2)	Low Risk (1)
Switching cost	Difficult	Manageable	Easy
Supplier competition	Few / Monopoly	Limited	Competitive
Impact of supplier failure	Severe disruption	Moderate disruption	Minimal impact
Technical complexity	Highly specialised	Moderate	Standardised

Case Application: Healthcare Procurement

Strategic Categories

Certain pharmaceuticals were classified as Strategic due to high annual spend, limited suppliers and significant switching costs. Management included long-term contracts, designated relationship managers and quarterly reviews.

Leverage Categories

High-volume essential medicines were categorised as Leverage due to competitive markets and standardised specifications. Management focused on competitive tendering and demand aggregation.

Bottleneck Categories

Specialised reagents and proprietary spare parts were identified as Bottleneck items with limited suppliers and high disruption risk. Management emphasised contingency planning.

Non-Critical Categories

Routine consumables were classified as Non-Critical. Management focused on process efficiency and transaction cost reduction.

Governance and Supplier Management

Quadrant	Management Focus
Strategic	Senior oversight and relationship management
Leverage	Category management and competitive sourcing
Bottleneck	Risk monitoring and continuity planning
Non-Critical	Operational efficiency and transactional control

Implementation Challenges

Challenges included incomplete spend data, stakeholder resistance and risk of subjective classification. These were mitigated through stakeholder engagement, finance collaboration and use of e-procurement systems.

Dynamic Review

Supply positioning should be reviewed regularly as spend patterns, market conditions and strategic priorities evolve. Categories may move between quadrants as risk and value shift.

Conclusion

Supply positioning provides a structured framework for analysing procurement categories according to value and risk. When supported by quantitative scoring and stakeholder engagement, it enables healthcare organisations to allocate resources effectively, mitigate supply risk and support strategic health outcomes.

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