Single/Multi Sourcing Essay

1071 Words5 Pages
1. Explain single sourcing and multiple sourcing Single sourcing –the buyer is supplied from on a single source in production. This type of supplier relationship refers to supply of medium to high levels of assets specificity, with goods and services linked directly to the core competencies of the buying firm. Multi sourcing –means that an order is split among multiple suppliers/manufactures that will all deliver the same product. It is most common used when the buying firm wants to enhance competition. In contrast to single sourcing multiple sourcing is when you have more than one supply/manufacturing firm. Multiple sourcing is more of arm´s length/ a more distanced and impersonal relation with many suppliers, in opposite to the relations in single sourcing. 2. Discuss when, and why to use single-sourcing and when and why to use multiple sourcing
E.x. include advantages and disadvantages/challenges with the two sourcing principles/concepts When deciding whether to use single or multiple sourcing, the management has to evaluate suppliers out of quality, delivery, technology and suppliers support. Single sourcing is common when the product and/or service are directly linked to the core- competence and the demand for JIT is important for the buying firm. Firms using single source will get a better price (economic of scale) and also a better contact with the supplier and more. However single sourcing can be devastating for a firm, worst scenario the firm would not receive any products. The supplier could also lack the capacity to meet the demand from the buying firm regarding such matters as quantity and quality. Multiple sourcing is more common when the firm seeks to enhance competition and flexibility. The cost will be reduced because of competition and the risk with not getting any products will be reduced. Also the buying firm will get more
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