What is Single Sourcing?  

Single sourcing is a procurement strategy in which a company purchases the goods or services it requires from just one supplier. This strategy is often chosen to simplify purchasing processes and build close relationships with suppliers.  

By focussing on one supplier, companies can often negotiate better conditions and simplify communication and quality management.  

Why do companies opt for Single Sourcing?  

Companies opt for single sourcing for a variety of reasons, including cost efficiency, improved quality assurance and simplified procurement processes. By concentrating purchasing on one supplier, better prices and conditions can often be achieved.  

In addition, close co-operation can improve the quality of the products or services purchased, as the supplier can respond precisely to the specific needs of the company.  

What is Sole Sourcing?  

Sole sourcing is a similar strategy to single sourcing, but with the difference that the chosen supplier is the only available provider for a product or service.  

This may be the case due to patents, specialised technologies or unique capabilities of the supplier. Sole sourcing is often not a conscious choice, but a necessity when no alternative sources of supply are available.  

When does Single Sourcing make sense?  

Single sourcing is particularly useful when the quality of the product or close co-operation with the supplier is crucial to the success of the business. It is also suitable if the procurement costs are to be minimised by reducing the number of suppliers.  

In industries where specialised products or services are required, single sourcing can lead to a strong partnership that promotes innovation and quality.  

What is the difference between Single, Dual and Global Sourcing?  

The main difference between these sourcing strategies lies in the number of suppliers. Single sourcing means relying on a single supplier, while dual sourcing utilises two suppliers for the same product to spread the risk.  

Global sourcing refers to the procurement of goods and services from the global market, regardless of the geographical location of the suppliers. This strategy allows companies to benefit from lower costs and a broader supplier base.  

How does Single Sourcing affect the supply chain?  

Single sourcing can have a significant impact on a company's supply chain by reducing complexity and increasing efficiency. This sourcing strategy allows for deeper integration and coordination between the buyer and the supplier, resulting in better forecasting accuracy, adjusted inventory levels and optimised transportation routes.  

However, it also makes the organisation more vulnerable to disruption if the sole supplier encounters problems. Companies must therefore develop robust contingency plans to prepare for potential disruptions and ensure the stability of their supply chain.  

Single Sourcing: Conclusion:  

Single sourcing is an effective procurement strategy that enables close collaboration between buyer and supplier. It can lead to cost savings, better product quality and optimised procurement processes.  

However, it also harbours risks, particularly in terms of dependence on a single supplier. Companies should carefully consider the decision for single sourcing and combine it with other sourcing strategies if necessary to minimise the risk.