Supplier segmentation has become one of the most important supply chain- related activities for most firms working with multiple suppliers for different products and services. Purchasing portfolio matrix (PPM) is a segmentation method that considers two dimensions (profit impact and supply risk) against which the materials purchased by the company should be assessed and classified. Despite its popularity, PPM has also been the subject of serious criticism, for instance with respect to the selection of segmenting variables and the operationalization of its dimensions. A new approach to supplier segmentation, called supplier potential matrix (SPM), aims to fulfil the need for a unifying conceptual framework that includes all the important variables from previously proposed methods under two overarching dimensions: supplier capabilities and supplier willingness. While the focus of PPM is on supply, SPM mainly focuses on relationship by taking the other criteria into account. However, it is important to include both the supplies and the relationship with those who supply, the suppliers. The main purpose of this study is to bring these two approaches together through a hybrid matrix called PPM-SPM. Data has been collected from a company working with 70 suppliers. A multi-criteria decision- making method, called best worst method (BWM), is used to determine the weights of the criteria we need for the dimensions of the two segmentation approaches. The suppliers are segmented based on the two approaches. A combined PPM-SPM segmentation is then proposed and discussed. The results show that the combined segmentation could help improve supplier management.
