Single Source versus Multiple Sources in Strategic Sourcing: A Comparative Analysis

Assignment
2
Single Source versus Multiple
Sources

Abstract
The aim of this report is to examine a number of case studies and research articles that
evaluate the use of different sourcing strategies used in organizations that make up a company’s
strategic decisions. Strategic sourcing is a vital component [of supply chain management] with
real-world impact on all facets of a business, from supply chain to final product and service
delivery. Strategic sourcing is a collaborative process that allows an organization to align
purchasing power with its overall value proposition. It improves efficiency and quality by
building a robust, diverse supply base. (Cognizant, 2016, 3)
Using the recommended textbook, Sourcing and Supply Chain Management- 5th edition by
Robert Handfield and reputed academic journals this report analyses three case studies and three
research articles in relation to how an organization is effected using a single sourcing strategy or
multiple sourcing strategies and how important this decision is on the overall supply chain.
The analysis of the article and case studies all conclude that there is no correct strategy that
all organizations can implement which will be most beneficial holistically. In Kerney’s article, he
discusses why organizations are unable to realize maximum profits their sourcing decisions.
Procurement managers often find it difficult to maximize their benefits as illustrated in their
developed in their strategies (Kerney, 2010, 1). According to research conducted on various
multinational companies, it was realized that most companies do not realize their intended benefits
from the sourcing strategy. This realization was made on the basis that none of the organization
reached stage four on the test (Kerney, 2010, 1). The failure is caused by the company’s focus on
improvement and strategic supplier relationship other than focusing on the inclusiveness under
which they monitor the whole business at large. In the monitoring, the business should focus on
the savings made and the opportunities that need investment. To conclude, while there is no
definite approach, the mutual understanding is that there are lower risks in implementing multiple
sourcing strategies.

Table of Contents
Abstract....................................................................................................................................................2
1.0 Introduction........................................................................................................................................3
2.0 Literature Review..............................................................................................................................4
2.1 Article 1: Single versus multiple supplier sourcing strategies.......................................................4
2.2 Article 2: Multiple or Single Sourcing? (Tullous and Utrecht, 1992)............................................5
2.3 Article 3: A risk/benefit analysis of sourcing strategies: Single vs. multiple sourcing..................6
3.0 Case Comparative Analysis...............................................................................................................7
3.1 Core problems of the case..............................................................................................................7
3.2 The comparative analysis and suggested solution..........................................................................8
References..............................................................................................................................................10

1.0 Introduction
Successful supply chain management necessitates an effective sourcing strategy to combat
uncertainties in both supply and demand (Ambe, 2012, 128). Often organizations are left to choose
whether they should use single sourcing or multiple sourcing. There is no correct choice as both
have their own separate advantages and disadvantages. From the industry level viewpoint, single
sourcing may be more appropriate to use over multiple sourcing. In the same way, from a company
level viewpoint, single sourcing may be more suitable for certain organizations over another. The
case studies sourced from Sourcing and Supply Chain Management- 5th edition by Robert
Handfield and research articles found online to explore the advantages and disadvantages of using
single sourcing and multiple sourcing. The case studies also provide an insight into how some
companies supply chains are at risk of choosing the wrong sourcing method.
It is observed that small companies lean towards single sourcing meanwhile larger
companies tend to use multiple sourcing as the demand for inventory is higher and there are
high risks associated with single sourcing. The buying-selling situation of the firm is also a
major factor in deciding whether a company should a single source or not. If an organization
aims to have a steady flow of materials, they are recommended to lean towards using multiple
suppliers