Single Sourcing Strategy

Any effective supply chain management needs an active sourcing strategy to manage uncertainties in supply and demand. Within this process, one of the key strategic problems faced by procurement managers is the selection of optimal number of suppliers for their raw material. According to a survey conducted by University of Cambridge consisting of 400 companies, supply discontinuity from single sourcing is the most important risk and prime focus for majority of the companies. Other risks include supplier capacity and raw material cost. However, companies adopt single sourcing strategy primarily due to following reasons.