The question refers to the Kraljic Matrix, a portfolio analysis tool used for segmenting an organization's spend. Items classified as Strategic/Critical are characterized by high supply risk (e.g., few suppliers, complex specifications) and high value/profit impact. For these items, the primary objective is to manage risk and ensure long-term availability. A partnership or strategic alliance is the most appropriate strategy. This approach fosters close collaboration, joint planning, information sharing, and mutual trust, which are essential for mitigating supply risks, driving innovation, and creating sustained competitive advantage. Transactional or adversarial approaches are unsuitable due to the high stakes involved.

A. Competitive bidding is most effective for 'Leverage' items (low risk, high value), where multiple suppliers exist, and the goal is to achieve the best price.

B. Outsourcing is a make-or-buy decision, not a specific supplier relationship strategy. A strategic item could be outsourced, but the relationship would still need to be a partnership.

D. An arm’s-length relationship is transactional and suitable for 'Non-critical' or 'Routine' items (low risk, low value), where relationship investment is unnecessary.

1. Kraljic, P. (1983). Purchasing Must Become Supply Management. Harvard Business Review, 61(5), 109–117. In the section describing the portfolio matrix, items in the "Strategic" quadrant (high profit impact, high supply risk) are identified as requiring a "supply management" approach, which is characterized by long-term, collaborative relationships.

2. Lysons, K., & Farrington, B. (2020). Procurement and Supply Chain Management (10th ed.). Pearson. In Chapter 5, "Portfolio Analysis," the text explains the Kraljic matrix and explicitly states that for the 'strategic' quadrant, the recommended strategy is "performance-based partnership" and "strategic alliances" (p. 168, Table 5.3).

3. Van Weele, A. J. (2018). Purchasing and Supply Chain Management (7th ed.). Cengage Learning. Chapter 4, "Purchasing and Business Strategy," discusses purchasing portfolio models. For strategic products, the author recommends strategies such as "Early supplier involvement," "Co-development," and "Long-term contracts," all of which are elements of a partnership approach (pp. 120-121).