The profit impact of a given supply item can be defined in terms of the volume purchased, percentage of total purchase cost, or impact on product quality or business growth. Supply risk is assessed in terms of availability, number of suppliers, competitive demand, make-or-buy opportunities, and storage risks and substitution possibilities. Using these criteria, the company sorts out all its purchased items into the categories shown in Exhibit II: strategic (high profit impact, high supply risk), bottleneck (low profit impact, high supply risk), leverage (high profit impact, low supply risk), and noncritical (low profit impact, low supply risk).