Through procurement planning and strategic execution, companies can be more aware of the factors and elements that are necessary to be considered before buying materials andor items or selecting the source. If both sides are mutually dependent on each other, a single sourcing strategy. However the risk analysis of both these approaches follows stereotypes. Single versus multiple supplier sourcing strategies. Organizations can choose to focus on a single priority or more than one. Though interlinked closely, both procurement process and sourcing strategy are not one and same. Production, manufacturing and logistics single versus multiple supplier sourcing strategies gerard j. Pdf choosing between single and multiple sourcing based.
Other companies may use a procurement strategy of using a core purchasing cycle. On the other hand, a global sourcing strategy must be executed by a suitable organisation. Single sourcing publishing is a method that is used to manage the content from a single source. Single sourcing is also known as single source publishing because it uses a sole resource for using and reusing information. Should you choose a single or multiple supplier strategy. Our results indicate that single sourcing is a dominant strategy only when supplier capacities are large relative to the product demand and when the.
Single sourcing strategy produces more reliability, good relationship, reduces operational cost but at the same time switching cost creates vulnerability. Procurement strategies often focus on options like reducing costs, mitigating risks, and expanding organically. Pdf the extent of single sourcing in defence procurement and its. It can have a profound impact on a companys financials and can strongly influence the purchasing and procurement processes. Benefits and risks of single sourcing scm supply chain. If your company decides to buy only dell computers then that is single source purchasing. To address these topics, the following key issues are addressed. The 5 principles of single sourcing in technical documentation. Over the years i have seen some companies practiced an adversarial relationship and multi sourcing approach for their supplies. It assumes that a firm can change its purchasing strategy and decide to use dual sourcing in the case of a single supply source, or differently revert to a single one in the case of dual sources. It is often opted for with the purpose of reducing material costs. Developing the strategic sourcing strategy is a fundamental part of the purchasing and supply management process.
A model of interrelated decisions article pdf available in supply chain forum 71 january 2006 with 18,247 reads how we measure reads. Strategic sourcing strategy cips has formulated positions on strategic sourcing as this is a key activity for purchasing and supply management professionals. This is of course still a fundamental aspect of strategic sourcing but this practice. In our online class mastering purchasing fundamentals, we cover types of suppliers and supplier choice methodologies. Ill probably see in the course, but the single source must be kept honest in their pricing. Pdf choosing between single and multiple sourcing based on. The study found a direct relationship between multiple sourcing, green sourcing and global sourcing with performance of procurement department as well as an inverse relationship between single sourcing and performance of the procurement. Jan, 2016 single sourcing and reuse in technical documentation is getting more and more widespread these days. This practice, known as multisourcing or bestinbreed. In publishing single sourcing is defined as the usage of one solitary document to create several other documents. Jul 31, 2019 in publishing single sourcing is defined as the usage of one solitary document to create several other documents. Whether single or multiple sourcing reduces the risk, is disputed.
Some of the sourcing strategies that are used in supply chain management today include. Competition is a reasonable strategy for the production. Nov 06, 2016 procuring materials for the intention of production, sales and service fulfilment is indispensable for every single business. What are the latest trends and innovations in strategic sourcing and procurement. Deliver the particular set of services in a competitive manner. Companies can develop a suitable global sourcing strategy only if they are able to understand global sourcing in all its dimensions and with all its chances and risks. Strategic sourcing is a logical process involving the application of tools by skilled, competent and knowledgeable people. We use lot of terms like strategic sourcing, procurement andor purchasing. Sourcing is a critical activity used at both tactical and strategic levels. It enables the content to be used in different mediums repeatedly as it becomes the basis for other contents. Most oem practice single sourcing where a supplier is able to provide the entire volume of demand for strategic commodities to achieve desired cost, quality, delivery and lead time information. According to a recent survey, 78% of cpos around the world identify cost reduction as their top priority procurement strategy. A multiple sourcing definition is outsourcing several of your companys most important operations to several different vendors instead of using a single source. Nov 22, 2007 i agree there are many benefits to single sourcing.
The collection used drop and pick method for administering the questionnaires. Single sourcing decisions are usually made at strategic and top management level where purchasing and supply managers need to determine whether and how much value single source relationships. Promotional items in some cases organisations have a need to produce. In purchasing sole sourcing take place when only one supplier for the required item is available, whereas with single sourcing a particular supplier is purposefully chosen by the buying organisation, even when other suppliers are available larson and kulchitsky, 1998. Procurement strategy develop a strategy for procurement.
Single versus multiple supplier sourcing strategies semantic scholar. Primary disadvantages of single sourcing include supplier control in bargaining, limited opportunities for the lowest price and limited product diversity. Over the years i have seen some companies practiced an adversarial relationship and multisourcing approach. For more information cherryleaf ltd cherryleaf house 31 arlington road. Instead, more and more companies have begun to source related functions to multiple providers. There is often a tussle between choosing a right sourcing strategy which says, whether the buyer should go for single sourcing or multiple sourcing. The process of producing multiple outputs from one single source of information. The ultimate guide to strategic sourcing purchasecontrol. Negotiations with potential vendors to ensure that they meet the new procurement strategy and cost benefit analysis. A library of procurement tools, templates and guides, starting with resources for schemes and contracts. April 2627, 2017 the hackett group revisiting the core principles of strategic sourcing. The results of the analysis will vary by company and category but will follow the major themes below.
To start, we introduce the concepts of strategic management and the strategic decision making process, which is the domain in which we situate this master dissertation. There are a number of current trends and approaches that managers and practitioner of a supply chain may consider to achieve a competitive edge and single sourcing is one of them. Our results indicate that single sourcing is a dominant strategy only when. Single versus multiple supplier sourcing strategies request pdf. This paper aims to educate readers on some of the sourcing fundamentals of. A single source procurement is one in which two or more vendors can supply the commodity. Benefits sole sourcing provides multiple benefits for an organization.
Pochard 2003 proposes a model based on real options to determine the optimal sourcing strategy in the presence of supply disruption risk. Single sourcing the customer chooses a single supplier to provide the entire set of services that it wishes to outsource, and relies on that supplier to carry responsibility for the outsourced services throughout the. Single and multiple sourcing are the more frequently discussed approaches in supply risk management khan et al. Single source procurement is purchasing from only one vendor because they are. Using a selfassessment tool known as the sourcing and procurement strategy scorecard, you will develop a clear picture of which sourcing and procurement strategy areas need attention. A real options approach article pdf available in journal of purchasing and supply management 161. Arnold 1999 argued that global sourcing implies a systematic extension of procurement policy worldwide and a strategic. After this, we will look into the process of procurement and strategic sourcing.
Nov 11, 2004 for many companies, sourcing decisions can be some of the most strategic in the organization. These risks are often seen as a risk of single sourcing. Sourcing strategy deals with planning, designing and building a reliable and competitive supplier base, determining the strategy for procurement, defining pricing strategies and supply chain requirements. It is concerned with what needs to be purchased, why, when and where. Our results indicate that single sourcing is a dominant strategy only when supplier capacities are large relative to the product demand and when the firm does not obtain diversification benefits. This section describes the different characteristics of single sourcing and multi sourcing. The concept is created to help supply chain managers and practitioners to improve, develop and implement strategic sourcing strategies. It will look at the situations which require such strategy and discuss the importance of careful source selection.
Purchasing singlesole source goods effectively whittington. It can make working with complex documentation much more efficient. Typically this service is provided for a fixed fee independent of the volume or expenditures on print production, warehousing and distribution. This is where they order from a group of regular vendors and use outsourcing procurement for their larger and ad hoc purchases. Moreover, it buyers spend more than they need to on purchases and renewals in more than 75% of the time. For purposes of this paper, strategic sourcing will be defined as the. Single source purchasing refers to purchases from one selected supplier, even though there are other suppliers that provide similar products. Singlesourcing in defence procurement and its relevance as. This is clearly a noncompetitive procurement method, and it should be used only under exceptional circumstances, namely. Procurement strategy develop a strategy for procurement in.
Successful single sourcing allows you to create and maintain one single set of. A mathematical approach to decision making shubhendu mandal1 1indian institute of foreign trade, new delhi, india abstract. Provides an introduction to the benefits of single sourcing summarises the obstacles to successfully completing a single source project outlines some single sourcing strategies and writing techniques introduces some single sourcing tools and technologies. Pdf the selection of a given purchasing strategy is a central activity in risky environments. Acquiring goods, services and construction works from only one source is referred to as. Single source publishing, also known as single sourcing publishing, is a content management method which allows the same source content to be used across different forms of media and more than one time. A ninestep approach for successful strategic it sourcing. In other cases, we find that multiple sourcing is an optimal sourcing strategy. Gep smart tm is a cloudbased, sourcetopay procurement software that delivers comprehensive spend, sourcing and procurement functionality in a single, unified platform native to cloud, mobile and touch technologies this would be below unified procurement platform. Single sourcing the selection of one supplier for 100% of a particular requirement. Multi sourcing strategy includes multiple suppliers.
Single sourcing and reuse in technical documentation is getting more and more widespread these days. The decision to sole source an item, particularly for manufacturing has many benefits and risks to be considered. Choosing between single and multiple sourcing based on supplier default risk. These strategies are predominant when sourcing for it or indirect purchasing such as office supplies and cleaning. For many companies, sourcing decisions can be some of the most strategic in the organization. These types of courses are an excellent complement to six sigma, which we teach in our online course.
However, strategic sourcing can go well beyond cutting costs. Level 4 diploma in procurement and supply d3 sourcing in procurement and supply tions 20 exam exemplar questions. Single sourcing decisions are usually made at strategic and top management level where purchasing and supply managers need to determine whether and how much value single source relationships add leenders et al. In this blog we tried to explain the difference between strategic. The user can use this single paper or document in different formats to create manual or online texts or papers. One of biggest risk is the governance which is quite insignificant in single sourcing. Procuring from a single source jorge lynch 2 comments acquiring goods, services and construction works from only one source is referred to as. Oct 18, 2015 4 reasons why single sourcing is still good strategy. I also agree with your post regarding online courses. Ventovuori 2007 conducted a study in finland about sourcing strategy. Procuring from a single source the procurement classroom.
One example of strategic sourcing is the commodity sourcing strategy, which focuses on developing a specific sourcing strategy for a category or. Singlesourcing refers to a procurement strategy in which a single supplier of a given product or service is chosen by the buying. It also includes a framework to assess an enterprises sourcing strategies and sourcing strategy capabilities. For example some companies may decide to undertake a single sourcing procurement strategy that involves obtaining excellent dedicated service from a single vendor.
Today, procurement professionals achieve savings through sourcing strategies like volume consolidation, product specification improvement, best price evaluation, and competitive global sourcing. The integration of procurement and corporate strategy is reflective of the transformation of purchasing to supply management. Revisiting the core principles of strategic sourcing. Traditionally, sourcing was considered to be the identification of new or potential suppliers. Choosing between single and multiple sourcing based on. Single sourcing has become increasingly practiced today. Definition of sourcing the 2 main sourcing definitions.
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