The Kraljic Portfolio matrix classifies an organization's purchases into four categories based on two key dimensions. The first dimension, Profit Impact, assesses the strategic importance of an item on the organization's profitability. This is determined by factors such as the cost of the item, its impact on product quality, and its contribution to the business's bottom line. The second dimension, Supply Risk (also referred to as supply market complexity), evaluates the vulnerability of the supply market. This includes factors like the number of available suppliers, competitive pressures, potential for substitution, and logistical challenges. By plotting items against these two axes, an organization can develop differentiated procurement strategies for each category.

References:

1. Kraljic, P. (1983). "Purchasing Must Become Supply Management." Harvard Business Review, 61(5), pp. 109–117. The matrix and its two dimensions, "profit impact" and "supply risk," are introduced and detailed on page 111.

2. Van Weele, A. J. (2018). Purchasing and Supply Chain Management. 7th ed. Cengage Learning. Chapter 6, Section 6.4, "The purchasing portfolio matrix of Kraljic," explicitly defines and explains the two dimensions of the model.

3. Gelderman, C. J., & Van Weele, A. J. (2005). "Purchasing portfolio models: A critique and an update." The Journal of Supply Chain Management, 41(3), pp. 19-28. The article's introduction reviews the original Kraljic model, identifying its dimensions as profit impact and supply risk. DOI: https://doi.org/10.1111/j.1745-493X.2005.04103003.x

4. CIPS (Chartered Institute of Procurement & Supply). (2018). Procurement and Supply in Practice L4M8. Stamford, UK: Profex Publishing. The official CIPS L4M8 study guide details the Kraljic matrix, defining its axes as 'Impact on business' (profit impact) and 'Supply market risk'.