What does the supply positioning matrix plot against each other?

The supply positioning matrix is a strategic tool used in procurement to analyze and categorize suppliers based on two key dimensions: financial impact and complexity/supply risk. By plotting these aspects against each other, organizations can assess the overall importance of different suppliers and the associated risks involved in sourcing from them.

When considering financial impact, this refers to how significant a supplier is in terms of cost to the organization and the potential influence on overall profitability. On the other hand, complexity or supply risk takes into account factors such as the difficulty in switching suppliers, the reliability of delivery, and the potential for supply chain disruptions.

Plotting these two dimensions allows procurement professionals to develop tailored strategies for managing suppliers effectively. For instance, suppliers that are both high in financial impact and complexity are typically managed more strategically due to their crucial role in the organization's supply chain. This method aids in prioritizing where to focus resources and efforts, ensuring that the organization mitigates risks and maximizes efficiency in its supply chain operations.

In summary, the correct answer captures the essence of the supply positioning matrix, highlighting the balance between managing financial considerations and understanding the risks associated with various suppliers.