In brief
Dual sourcing and multiple sourcing refer to deliberately splitting a requirement between two or more qualified suppliers to reduce risk.
Contents
What is Dual sourcing and multiple sourcing?
With dual sourcing, an item or category is deliberately purchased from two suppliers; with multiple sourcing, from several. The opposite model is single sourcing, in which only one supplier is used even though alternatives exist. This must be distinguished from sole sourcing, where there genuinely is only one source of supply.
The main advantage is security of supply: if one supplier fails, the other can take over at least part of the requirement. Competition is also maintained, which keeps prices and performance in check. On the other hand, there is greater effort for negotiation, quality assurance and supplier relationship management, as well as smaller volumes per supplier. The requirement is often split in fixed shares, or a main supplier is backed up by a qualified second source.
A second source is only useful if it has been qualified before an emergency arises. This includes technical verification of equivalence, sample inspection, supplier evaluation and maintenance of master data, so that orders can be placed without delay when needed. A second source that exists only on paper, by contrast, offers little protection if it is only approached once a disruption occurs.
In practice: maintenance and procurement
For critical spare parts, it pays to use a second source with small quantities during normal operation so that processes and quality have been tried and tested. For parts supplied only by the original manufacturer, a verified alternative part can take on the role of the second source.
Synonyms and abbreviations: dual sourcing · multiple sourcing · multi-sourcing · second source · second sourcing
Frequently asked questions
What is the difference between single, dual and multiple sourcing?
With single sourcing, a requirement is deliberately obtained from only one supplier, although alternatives would exist. Dual sourcing splits it between two suppliers, multiple sourcing between several. Each additional source increases security of supply, while at the same time coordination effort grows and volumes per supplier fall.
When is dual sourcing worthwhile?
Dual sourcing is worthwhile above all for parts whose failure causes high downtime costs, for suppliers with an identifiable risk and in markets with fluctuating availability. For non-critical standard parts with many suppliers, on the other hand, the additional effort of a formally qualified second source is often not justified.
How do you qualify a second supplier?
Usual steps are a supplier evaluation, verification of technical equivalence using data sheets and drawings, sample deliveries with incoming inspection and, if necessary, an audit. The second source should then be set up in the system and used regularly so that it is immediately ready in an emergency.
What is sole sourcing?
Sole sourcing applies when there genuinely is only one source of supply, for example because a part is protected or manufactured exclusively by the original manufacturer. Unlike single sourcing, this is not a free choice. It can only be safeguarded through stockholding, contracts or the search for verified alternatives.