Dual Source vs. Single Source<\/h1><\/div><\/div><\/div>Should You Dual Source Or Single Source?<\/h2><\/div><\/div><\/div>To dual source means to use two preferred suppliers to provide the same product or service. To single source means to use just one preferred supplier, despite there being multiple capable suppliers available.<\/p>\n
Many purchasers decide to single or dual source prior to issuing an RFP or tender based on certain assumptions. Common assumptions are that there is a lower cost with a single source due to you leveraging your volume but less risk with a dual source due to having a qualified supplier up and running if the other fails to perform.<\/p>\n
Those assumptions may be right sometimes but, as a professional, you should make decisions on facts, not assumptions. To acquire facts, request three prices from your suppliers: (a) for 100% of your business, (b) for 70% of your business, and (c) for 30% of your business.<\/p>\n
Upon bid receipt, compute the cost of doing business with the two qualified suppliers who bid the lowest for the 70% and 30% chunks of your business. Compare that cost with the lowest qualified single source bid. Is there a cost difference between the single and dual source options? If so, does the lower risk justify the premium?<\/p>\n
I must close this article with these caveats:<\/p>\n
\n- Executives may resist paying a premium for goods and services. If they need to be sold on the concept, compare it to buying insurance – expending funds to protect your company from the unexpected.<\/li>\n
- A dual source situation can have disadvantages beyond just a higher cost. Consider any potential problems from inconsistencies in quality or the extra work involved in managing two suppliers.<\/li>\n
- For simplicity, I used price as the only decision criterion above. Make complex supplier decisions on a total cost of ownership basis, considering quality, delivery, service, and other variables.<\/li>\n
- Keep in mind that just because you contract with a single source doesn’t mean that a non-contracted supplier won’t be available if you might need one.<\/li>\n
- Why might one of the dual source suppliers fail? Could any such reason cause both to fail at the same time? If so, dual sourcing may either (a) not truly reduce your risk and\/or (b) work well only if you choose suppliers with materially different traits.<\/li>\n<\/ul>\n
Recommended reading:<\/strong><\/p>\n\n- Back To The Dual vs. Single Source Question<\/a><\/li>\n
- Benefits of Single Sourcing<\/a><\/li>\n<\/ul>\n<\/div><\/div><\/div><\/div><\/div>
Do You Want a More Rewarding Procurement Career?<\/h5><\/div>![](\"https:\/\/www.certitrek.com\/nlpa\/wp-content\/uploads\/sites\/5\/2020\/12\/spsm_verify.jpg\" "\\"spsm_verify\\"")
<\/span><\/div>Are you tired of not getting enough opportunities, respect, and money out of your procurement career? Well, guess what? Nothing will change unless you take action towards becoming a world-class procurement professional.<\/p>\n
Earning your SPSM Certification is the action to take if you want to bring the most modern procurement practices into your organization and achieve your career potential. Download the SPSM Certification Guide today to learn how to get started on your journey to a more rewarding procurement career!<\/p>\n<\/div>
Download<\/span><\/a><\/div><\/div><\/div>Need Better Performance From Your Procurement Team?<\/h5><\/div>![](\"https:\/\/www.certitrek.com\/nlpa\/wp-content\/uploads\/sites\/5\/2020\/12\/services.jpg\" "\\"services\\"")
<\/span><\/div>Are you a procurement leader whose team isn\u2019t achieving the results you know are possible? Maybe it\u2019s not enough cost savings. Or frustrating performance from the supply base. Or dissatisfied internal customers.<\/p>\n
You need a performance improvement plan that\u2019s easy to implement and quick to produce results. The NLPA can help.<\/p>\n
Download our whitepaper \u201cThe Procurement Leader\u2019s Guide To A More Successful Team.\u201d You\u2019ll learn the 7 steps for transforming your staff into a results-producing, world-class procurement team.<\/p>\n<\/div>
Should You Dual Source Or Single Source?<\/h2><\/div><\/div><\/div>To dual source means to use two preferred suppliers to provide the same product or service. To single source means to use just one preferred supplier, despite there being multiple capable suppliers available.<\/p>\n
Many purchasers decide to single or dual source prior to issuing an RFP or tender based on certain assumptions. Common assumptions are that there is a lower cost with a single source due to you leveraging your volume but less risk with a dual source due to having a qualified supplier up and running if the other fails to perform.<\/p>\n
Those assumptions may be right sometimes but, as a professional, you should make decisions on facts, not assumptions. To acquire facts, request three prices from your suppliers: (a) for 100% of your business, (b) for 70% of your business, and (c) for 30% of your business.<\/p>\n
Upon bid receipt, compute the cost of doing business with the two qualified suppliers who bid the lowest for the 70% and 30% chunks of your business. Compare that cost with the lowest qualified single source bid. Is there a cost difference between the single and dual source options? If so, does the lower risk justify the premium?<\/p>\n
I must close this article with these caveats:<\/p>\n
\n- Executives may resist paying a premium for goods and services. If they need to be sold on the concept, compare it to buying insurance – expending funds to protect your company from the unexpected.<\/li>\n
- A dual source situation can have disadvantages beyond just a higher cost. Consider any potential problems from inconsistencies in quality or the extra work involved in managing two suppliers.<\/li>\n
- For simplicity, I used price as the only decision criterion above. Make complex supplier decisions on a total cost of ownership basis, considering quality, delivery, service, and other variables.<\/li>\n
- Keep in mind that just because you contract with a single source doesn’t mean that a non-contracted supplier won’t be available if you might need one.<\/li>\n
- Why might one of the dual source suppliers fail? Could any such reason cause both to fail at the same time? If so, dual sourcing may either (a) not truly reduce your risk and\/or (b) work well only if you choose suppliers with materially different traits.<\/li>\n<\/ul>\n
Recommended reading:<\/strong><\/p>\n\n- Back To The Dual vs. Single Source Question<\/a><\/li>\n
- Benefits of Single Sourcing<\/a><\/li>\n<\/ul>\n<\/div><\/div><\/div><\/div><\/div>
Do You Want a More Rewarding Procurement Career?<\/h5><\/div><\/span><\/div>Are you tired of not getting enough opportunities, respect, and money out of your procurement career? Well, guess what? Nothing will change unless you take action towards becoming a world-class procurement professional.<\/p>\n
Earning your SPSM Certification is the action to take if you want to bring the most modern procurement practices into your organization and achieve your career potential. Download the SPSM Certification Guide today to learn how to get started on your journey to a more rewarding procurement career!<\/p>\n<\/div>
Download<\/span><\/a><\/div><\/div><\/div>Need Better Performance From Your Procurement Team?<\/h5><\/div><\/span><\/div>Are you a procurement leader whose team isn\u2019t achieving the results you know are possible? Maybe it\u2019s not enough cost savings. Or frustrating performance from the supply base. Or dissatisfied internal customers.<\/p>\n
You need a performance improvement plan that\u2019s easy to implement and quick to produce results. The NLPA can help.<\/p>\n
Download our whitepaper \u201cThe Procurement Leader\u2019s Guide To A More Successful Team.\u201d You\u2019ll learn the 7 steps for transforming your staff into a results-producing, world-class procurement team.<\/p>\n<\/div>
To dual source means to use two preferred suppliers to provide the same product or service. To single source means to use just one preferred supplier, despite there being multiple capable suppliers available.<\/p>\n
Many purchasers decide to single or dual source prior to issuing an RFP or tender based on certain assumptions. Common assumptions are that there is a lower cost with a single source due to you leveraging your volume but less risk with a dual source due to having a qualified supplier up and running if the other fails to perform.<\/p>\n
Those assumptions may be right sometimes but, as a professional, you should make decisions on facts, not assumptions. To acquire facts, request three prices from your suppliers: (a) for 100% of your business, (b) for 70% of your business, and (c) for 30% of your business.<\/p>\n
Upon bid receipt, compute the cost of doing business with the two qualified suppliers who bid the lowest for the 70% and 30% chunks of your business. Compare that cost with the lowest qualified single source bid. Is there a cost difference between the single and dual source options? If so, does the lower risk justify the premium?<\/p>\n
I must close this article with these caveats:<\/p>\n
- \n
- Executives may resist paying a premium for goods and services. If they need to be sold on the concept, compare it to buying insurance – expending funds to protect your company from the unexpected.<\/li>\n
- A dual source situation can have disadvantages beyond just a higher cost. Consider any potential problems from inconsistencies in quality or the extra work involved in managing two suppliers.<\/li>\n
- For simplicity, I used price as the only decision criterion above. Make complex supplier decisions on a total cost of ownership basis, considering quality, delivery, service, and other variables.<\/li>\n
- Keep in mind that just because you contract with a single source doesn’t mean that a non-contracted supplier won’t be available if you might need one.<\/li>\n
- Why might one of the dual source suppliers fail? Could any such reason cause both to fail at the same time? If so, dual sourcing may either (a) not truly reduce your risk and\/or (b) work well only if you choose suppliers with materially different traits.<\/li>\n<\/ul>\n
Recommended reading:<\/strong><\/p>\n
- \n
- Back To The Dual vs. Single Source Question<\/a><\/li>\n
- Benefits of Single Sourcing<\/a><\/li>\n<\/ul>\n<\/div><\/div><\/div><\/div><\/div>
Do You Want a More Rewarding Procurement Career?<\/h5><\/div>
<\/span><\/div>Are you tired of not getting enough opportunities, respect, and money out of your procurement career? Well, guess what? Nothing will change unless you take action towards becoming a world-class procurement professional.<\/p>\n
Earning your SPSM Certification is the action to take if you want to bring the most modern procurement practices into your organization and achieve your career potential. Download the SPSM Certification Guide today to learn how to get started on your journey to a more rewarding procurement career!<\/p>\n<\/div>
Download<\/span><\/a><\/div><\/div><\/div>Need Better Performance From Your Procurement Team?<\/h5><\/div>
<\/span><\/div>Are you a procurement leader whose team isn\u2019t achieving the results you know are possible? Maybe it\u2019s not enough cost savings. Or frustrating performance from the supply base. Or dissatisfied internal customers.<\/p>\n
You need a performance improvement plan that\u2019s easy to implement and quick to produce results. The NLPA can help.<\/p>\n
Download our whitepaper \u201cThe Procurement Leader\u2019s Guide To A More Successful Team.\u201d You\u2019ll learn the 7 steps for transforming your staff into a results-producing, world-class procurement team.<\/p>\n<\/div>
- Benefits of Single Sourcing<\/a><\/li>\n<\/ul>\n<\/div><\/div><\/div><\/div><\/div>
- Back To The Dual vs. Single Source Question<\/a><\/li>\n
![](\"https:\/\/www.certitrek.com\/nlpa\/wp-content\/uploads\/sites\/5\/2020\/12\/services-contracting.jpg\" "\\"services-contracting\\"")
<\/span><\/div>