Multiple and single sourcing strategy: Advantages

Single sourcing

Multiple sourcing

Partnership between buyers and

Alternative sources of materials in case of
suppliers allows cooperation, shared
delivery stoppage by a supplier
benefits and long-term relationship based
on high levels of trust
Reduction of risk of opportunistic
behaviour

Reduced probability of bottlenecks due to

insufficient production capacity to meet
peak demand

Large commitment of the supplier that is

willing to invest in new facilities or new
technology

Increased competition among suppliers

leads to better quality, price, delivery,
product innovation and buyers
negotiation power

Lower purchase price resulting from

reduced production costs, due to better
knowledge of the manufacturing process
by supplier and achieved economies of
scale

More flexibility to react to unexpected

events that could endanger suppliers
capacity

Change from single to multiple sourcing strategy

Change from multiple to single sourcing strategy