When it comes to procurement, you cannot expect to walk on a smooth and hassle-free road. You may be confronted with several bad experiences, such as shipping delays and factory mishaps. As procurement has a deeper impact on your business, these bad things will also impact your business deeply. If you want to exercise better control over unfavorable situations, you need to give yourself ample time to develop a clear understanding of procurement. First of all, you need to learn how single sourcing differs from global sourcing. After getting familiar with these two concepts, you would be able to determine which strategy is suitable for your organization.
This blog has discussed definitions and the key differences between the two sourcing types. Keep reading the blog to learn the details.
Single Source Procurement
Single source procurement defines a company that relies on a single supplier for sourcing all goods required for production. It seems like putting all eggs in a single basket.
Many strategic sourcing companies have listed numerous advantages of single sourcing. It enables the businesses to maintain a steady relationship with their suppliers. This is why single sourcing can help you bargain the price. Trust and communication are two pillars of single sourcing.
As single-sourcing depends only on one vendor, you will have only one option or only one person to reach. In the face of an emergency, it may become detrimental to your business. If their machinery gets affected, then they may need more time to get you the suppliers. At this critical juncture, the delivery times and fulfilment of your consumers’ orders may delay. Such delay would give birth to dissatisfaction.
First, you need to find the right vendor. Many businesses hire strategic sourcing companies to find the right vendor. Following the tips given below can help you reach the right vendor:
- Decide what you need to supply
- You can ask for an RFQ (request for quote) online; some businesses prefer dealing with the vendors, which are ready to provide a detailed and transparent quote
- Next, you should research each listed vendor, their offerings, terms and conditions, and history
- Shortlist the vendor for final selection
- Select the one you believe to be a great fit for your business
Global Sourcing Procurement
The other procurement type, global sourcing refers to dual or multiple vendor sourcing. It allows a business to work with multiple vendors. For sourcing different goods. If single sourcing is putting all eggs in a single basket, global or multiple-vendor sourcing is dividing the eggs into many baskets.
Working with multiple suppliers reduces the risk of slowing down the delivery in the face of an emergency. If one supplier fails to provide you with your requirements, you can ask the next supplier for the same. Also, you can expect better quality from this sourcing as you can compare goods delivered by different suppliers.
When opting for multiple vendor sourcing, you will not get the opportunity of getting the robust bargaining authority provided by the single vendor sourcing.
Like single-vendor sourcing, you will need to find the right suppliers. In this case, you will need to finalize a pool of efficient suppliers instead of a single vendor.
How to Map out the Best Procurement Strategy
When you need to create a procurement strategy, considering the following facts can help you:
- Figure out your weaknesses
- Extend your list of vendors
- Segregate your market
As stated above procurement has a deep influence on the business, you must consider all possible aspects before finalizing a sourcing process. Take your time and make the best decision.