In brief
Single sourcing is the deliberate decision to obtain a material or part from just one supplier, even though alternatives exist.
Contents
What is Single sourcing?
Single sourcing pools the entire requirement for an item or category with one supplier. The advantages are higher volumes and thus better terms, less coordination effort, consistent quality and closer cooperation, for example in development or warehousing. The disadvantage is dependency: if the supplier fails, there is no short-term alternative.
This must be distinguished from sole sourcing, where there genuinely is only one source of supply, for example because a part is patent-protected or only the original manufacturer produces it. With dual sourcing and multiple sourcing, by contrast, the requirement is deliberately spread across two or more suppliers in order to diversify risk and maintain competition.
Whether single sourcing makes sense depends on criticality, market conditions and switching costs. A supplier risk assessment, contingency plans and contractually agreed minimum stock levels reduce the dependency.
In practice: maintenance and procurement
With spare parts, de facto sole sourcing often arises because only the original manufacturer supplies them. If such a part is discontinued, there is no alternative; checking for equivalent parts early on reduces this risk.
Synonyms and abbreviations: single source · single-source supply · single-supplier sourcing
Frequently asked questions
What is the difference between single sourcing and sole sourcing?
With single sourcing, a company deliberately chooses only one supplier, even though others would be available, for example to pool volume. With sole sourcing, on the other hand, there genuinely is only one source of supply, for example because of intellectual property rights or exclusive manufacturing. The difference is important for risk management: single sourcing can be changed if necessary, sole sourcing only through technical alternatives.
When does single sourcing make sense?
Single sourcing is suitable when pooling brings clear cost advantages, high consistency of quality is required or close technical collaboration is needed. Even with small quantities, a second supplier can cause more effort than it is worth. A prerequisite is a reliable, economically stable partner. For critical parts, contingency plans should nevertheless be in place, such as agreed safety stocks or a pre-qualified alternative source.
How can the risk of single sourcing be limited?
Regular supplier evaluations and monitoring of the partner's financial position help. Contractually, minimum stocks at the supplier, response times and obligations to inform about product changes or discontinuations can be agreed. In addition, a second source can be technically pre-qualified without ordering from it permanently. This retains the pooling advantage while keeping a switch possible in an emergency.