Sole Sourcing: Just Don't Do It

Over on the Purchasing's Blogs, Mary Walker picked up on a story in Industry Week that offered a few pieces of sage advice on advantages and disadvantages for successful sole sourcing. Personally, I've never been a fan of the practice, unless, of course, one has numerous back-up options to pull off the bench when necessary. In general, splitting an award decision for a long-term contract either 60/20/20, 80/20, or even 90/10 is usually a much safer bet. For the same reason that companies should avoid sole sourcing whenever possible, it's also preferable in a split of business situation to try to insure that all of your suppliers are not located in the same geographic area and that they don't share the same group of tier two/tier three suppliers.

Most important of all, if you're stuck in a sole source situation, it's critical to make sure that you're a highly strategic customer to the supplier to insure that your orders and corrective action requests are always given priority if and when performance or quality issues arise. And it can also help to frequently benchmark the market as well and share the findings with your supplier just to keep 'em on their toes.

Jason Busch

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