Single vendor sourcing has a whole host of benefits, but it isn’t always the most secure or flexible solution for your supply chain. While forging a strong relationship with a single supplier generally improves bargaining power and streamlines collaboration, it can leave your supply chain vulnerable and prevent rapid growth.
Here are three ways that exploring multi-source supplier relationships could give your business a boost.
Accepting ad-hoc orders Sourcing components from a single supplier is great for stability and consistency, but this consistency can be a disadvantage if the opportunity to accept a one-off order presents itself.
It goes without saying that dramatic changes to order quantities can be costly for any manufacturer, and some suppliers aren’t able to increase production for a single short run. With a secondary supplier in the pipeline, ready to facilitate ad-hoc orders, you have greater freedom to accept those large one off orders.
Exploring expansion Increasing production on a more permanent basis can also be a huge upheaval for you and your supplier, but – unlike ad-hoc orders – it’s worth it for the increased profit it brings to both businesses in the long run.
Yet whether it’s for a new customer, or a new product line for an existing client, no commercial avenue is set in stone from the start. Exploring a new project to expand your business can require a level of commitment to your supplier that’s not always possible. Should a single supplier make major changes to production, only for the contract to lapse after a short period of time, it could have a damaging effect on your relationship with that supplier.
Multi-sourcing from two or more manufacturers can help your business explore expansion without disrupting your existing supply chain, enabling you to take a more flexible approach to business growth.
Emergency cover No matter how reliable your supplier is, emergencies do happen and they can leave you and your clients in the lurch. Emergencies can vary from minor incidents that delay shipping – such as inclement weather, or a small plant malfunction – to serious disasters that can lead to unfulfilled orders.
This can be particularly problematic if your business sources components from overseas, with even the most minor delays potentially threatening project deadlines, once transportation times are taken into account.
Multi-sourcing allows your business to quickly regain its footing after encountering any glitches in the supply chain. A good relationship with your multi-source partners means that a trusted back-up supplier can be ready to pick up the short-fall when needed and, with a secondary supplier on home soil, the components you need can be delivered as a matter of urgency, without lengthy shipping times increasing those costly delays.