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Multiple sourcing: definition & important aspects for buyers
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Multiple sourcing in a nutshell:
Multiple sourcing describes the strategic procurement of a product or service from several different suppliers in parallel. This strategy enables purchasing to minimize supply risks and strengthens the negotiating position by reducing the degree of dependency on individual suppliers.
Example: A car manufacturer obtains 40% of its battery cells for electric vehicles from a Korean manufacturer, 35% from a Japanese manufacturer and 25% from a Chinese manufacturer, enabling it to continue production without interruption in 2023 despite supply bottlenecks at one of its main suppliers.
Contents
Introduction to multiple sourcing
What is multiple sourcing?
Multiple sourcing refers to a procurement strategy in which a company purchases similar goods or services from several suppliers. This approach aims to minimize risks, increase security of supply and achieve competitive advantages through better prices and conditions. In contrast to single sourcing, multiple sourcing reduces dependency on individual suppliers and strengthens the purchasing department's negotiating position.
Core elements of multiple sourcing
Significance for purchasing
Multiple sourcing is of great importance in strategic purchasing in order to ensure security of supply and optimize costs. By working with several suppliers, purchasing can realize price advantages and improve the quality of the procured goods. It also makes a significant contribution to risk management by minimizing the impact of supplier failures or problems.
Implementation of multiple sourcing
The successful application of multiple sourcing requires strategic planning in order to select suitable suppliers and build relationships. By involving several suppliers for the same requirement, purchasing can gain flexibility and minimize risks.
Practical example: Electronics manufacturer secures component supply
An electronics company regularly needs microchips for its products. To avoid supply bottlenecks and take advantage of cost benefits, the company opts for multiple sourcing.
- Supplier selection: Three reliable suppliers from different regions are selected.
- Order distribution: 50% of the order quantity is allocated to supplier A, 30% to supplier B and 20% to supplier C.
- Risk diversification: If supplier A fails, suppliers B and C can deliver higher quantities at short notice.
- Price negotiation: Due to the volume, the company has a strong negotiating position and achieves better conditions.
Result: The company ensures a stable supply of microchips, reduces costs and can react flexibly to market changes.
Evaluation and strategic findings
✓ Critical success factors
→ Supplier qualification: Careful selection and regular evaluation of suppliers according to uniform criteria
→ Relationship management: building and maintaining strategic partnerships with all suppliers despite shared volumes
→ Process standards: Establishment of uniform processes and KPIs for all supplier relationships
⚠ Challenges
→ Coordination effort: Increased administrative effort due to managing multiple supplier relationships
→ Cost efficiency: Possible additional costs due to shared volumes and reduced economies of scale
→ Quality consistency: Ensuring consistent quality standards across all suppliers
Future trends and implications:
"Multiple sourcing is developing from a pure risk strategy into a strategic competitive advantage."
→ Digital integration of supplier networks
→ AI-supported supplier selection and management
→ Dynamic adjustment of the reference quotas
→ Increased focus on regional sourcing clusters
Conclusion on supplier evaluation through multiple sourcing
Multiple sourcing is proving to be an essential procurement strategy for modern companies. Spreading procurement across several suppliers not only reduces supply risks, but also strengthens the negotiating position and enables flexible reactions to market changes. Despite the increased coordination effort, the advantages of risk diversification and security of supply outweigh the disadvantages. Careful supplier selection, efficient relationship management and standardized processes are crucial for successful implementation.
