The image displays the Kraljic Portfolio Purchasing Model. Box 8 represents the 'Strategic' quadrant, which is characterized by high profit impact and high supply risk. Items in this category are critical for the organisation's success and have a complex supply market. The recommended purchasing strategy for this quadrant is to ensure long-term supply availability and manage the relationship closely. A forward contract is a financial instrument that locks in the price and quantity of a commodity for future delivery. This directly mitigates both price volatility (profit impact) and supply uncertainty (supply risk), making it a highly appropriate strategy for managing strategic items.

A. new technology: This is a broad enabler or a potential long-term project, not a direct purchasing strategy for managing an existing high-risk, high-impact supply category.

C. outsource: This is a make-or-buy decision. While it could be part of a larger strategy, it is not in itself a purchasing tactic for managing a specific spend category.

D. insurance: This is a risk transference tool that provides financial compensation after a loss occurs but does not proactively secure the continuity of supply, which is the primary objective.

1. Kraljic

P. (1983). Purchasing Must Become Supply Management. Harvard Business Review

61(5)

pp. 109-117. (The seminal article describes strategies for the strategic quadrant focusing on long-term availability

including long-term contracts and vertical integration).

2. CIPS (Chartered Institute of Procurement & Supply). (2018). Managing Supply Chain Risk (L5M2). CIPS Official Course Book. Profex Publishing

pp. 55-59. (The official CIPS text outlines strategies for the strategic quadrant

emphasizing the need for collaboration

long-term relationships

and securing supply

for which forward contracts are a key tool).

3. Van Weele

A. J. (2018). Purchasing and Supply Chain Management. 7th Edition. Cengage Learning. Chapter 5

Section 5.4

"The Purchasing Portfolio Matrix." (This academic text details the Kraljic matrix and explicitly links strategies like long-term contracts and forward buying to the strategic quadrant to ensure supply security).