Managing Risks of Supply-Chain Disruptions: Dual ... - CiteSeerX

Chapter 3Multiple Sourcing ApproachMultiple sourcing is often cited as a possible solution to protect against “disruption in supply”.However, since the 80’s most firms have made a lot of efforts to reduce their supplier base andsome of them may be a little reluctant to adopt the multiple sourcing approach. The purpose of thischapter is to explain quickly the current thinking on supplier structure.3.1 Simple or Multiple Sourcing: Theoretical ApproachDetermining the number of suppliers is one of the key issues of supplier management. Single ormultiple sourcing? Each solution has its own advantages and drawbacks, as listed in the tablebelow.Table 3.1: Single sourcing Vs Multiple sourcing - Benefits of each approachSingle-SourcingMultiple-Sourcing- Get better pricing through higher volumes- Achieve higher quality standards throughcontinuous improvements- Lower costs that are incurred to source,process, expedite and inspect- Increase involvement and have betterinformation- Build stronger and longer-termrelationships- Obtain more influence with the supplier- Reduce lead times- Reduce inventory- Streamline the procedure- Protect the buyer during times ofshortages, strikes or other emergencies- Provide a back-up source- Maintain Competition- Keep a market feeling- Avoid complacency on the part of a singlesupplier- Meet local requirements for internationalmanufacturing locations- Meet customer’s volume requirements- When the technology path is uncertainSource: Adapted from “Purchasing and Supply Management: Supplier Management”, Piaw, T.C., (2002),National University of Singapore.26