Dual Sourcing — Everything a Procurement Professional Should Know (2024)

FAQs

Dual Sourcing — Everything a Procurement Professional Should Know? ›

Dual sourcing simply means operating with two suppliers for the same product.

Dual sourcing simply means operating with two suppliers for the same product.

Dual sourcing is the supply chain management practice of using two suppliers for a given component, raw material, product or service. The term dual sourcing is often used outside its strict definition to be synonymous with multi sourcing, which can be more than two.

One of the biggest disadvantages of dual sourcing is the possibility of inconsistent quality between your two suppliers. If one of your suppliers provides superior quality, but your other supplier's quality isn't quite as good, that may cause you problems.

Sourcing is the process of evaluating and hiring individual businesses to supply goods and services to your business. Procurement is the process of actually purchasing those goods and services.

Sourcing is a strategic process with long-term goals such as creating relationships with the most suitable suppliers and building and maintaining a resilient supply chain.

So, after careful thought, our five principles of sourcing are Coherence, Alignment, Rigour, Openness and Commerciality.

What are two advantages of dual sourcing? ›

The arguments that favor dual sourcing would be the benefits that companies can achieve by using the "70-30" approach. With this approach, one supplier is awarded 70 percent of a buyer's volume, while a second supplier is awarded the other 30 percent of the buyer's volume.

However, strategic sourcing is a mansion supported by 4 pillars- Spend analysis, sourcing, contract management supplier management.

They are as follows: Define requirements, select supplier, produce agreement, administer day-to-day, and assess performance.

Procurement Key Performance Indicators and Metrics

A procurement KPI or metric is a measurable value that tracks all relevant aspects of obtaining or buying goods and services. These KPIs enable the procurement department to control and optimize the quantity, quality, costs, timing and sourcing of purchasing processes.

Simple sourcing strategy involves finding the most cost-effective supplier of goods. It's carried out in many different areas and for a variety of business needs. One of the most common forms of sourcing is known as supply chain management.

How can I be a good sourcing manager? ›

Sourcing is the proactive searching for qualified job candidates for current or planned open positions; it is not the reactive function of reviewing resumes and applications sent to the company in response to a job posting or pre-screening candidates.

Multiple supply sourcing may benefit dependency, flexibility and capacity, but it can complicate supplier relationships and require greater resources to manage them. As supplier numbers grow, the price tag often goes up and the following drawbacks can occur: information sharing may become more complex.

Single sourcing, a powerful approach in a stable environment, can amplify a firm's exposure to risk (e.g., supplier's default) in the presence of uncertainty. Multiple sourcing, however, presents higher costs due to the management of more than one supplier.

What is a Dual Source Supplier? A dual source supplier is exactly as it sounds: using another supplier for your roll-forming needs.

in-house or outsource The most significant sourcing decision for a firm is whether to perform a task in-house or outsource it to a third party. Within a task such as transportation, man- agers must decide whether to outsource all of it, outsource only the responsive component, or outsource only the efficient component.

Why is Procurement Difficult? The procurement process is challenging because it involves teams who manage various responsibilities. From communicating with vendors to running compliance checks, processing payments, and analyzing market trends, a lot goes into running a function with such high stakes.

The four sources of risk in procurement are poor vendor management, inadequate contract management, inadequate systems and controls, and fraud.

How can I improve my procurement skills? ›

The four quadrants are: Strategic Items, Leverage Items, Bottleneck Items and Non-Critical Items.

The four main roles of procurement are sourcing, negotiation, contract management and supplier relationship management. These activities require a strong understanding of market trends, organizational objectives and supplier capabilities to ensure success.

Sourcing is the process of locating products or services outside of your company. Procurement is negotiating contracts and getting the best price for what you need. Together, these two processes can help your business save money and improve efficiency.

The procurement cycle consists of many steps, which can be grouped into five broad stages: definition of business needs, supplier evaluation and selection, management of supplier relationships, delivery of goods and services, and assessment and refinement of procurement processes.

The Three P's of Procurement

There are three Ps in the procurement management process; people, process, and paper.

What is a Procurement Checklist? A procurement checklist is a list of requirements that must be completed to successfully “procure” goods or services. It outlines the steps necessary for procurement and ensures each step is followed correctly.

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.

While P2P focuses on what happens between purchase requisitions and the final payment, S2P considers supplier management from its earliest stage. S2P covers the critical period between identifying a need and committing to a purchase with a specific supplier.

What are the pros and cons of multi-sourcing? ›

Multiple supply sourcing may benefit dependency, flexibility and capacity, but it can complicate supplier relationships and require greater resources to manage them. As supplier numbers grow, the price tag often goes up and the following drawbacks can occur: information sharing may become more complex.

It's simplest to identify Tier 2 suppliers as the sources where your Tier 1 suppliers get their materials. Again, using the apparel company example: That t-shirt factory receives its materials from a fabric mill. That mill is a Tier 2 supplier to the apparel company.

Types. There are two main types of SCM software applications: planning and execution. The planning software applications use advanced algorithms to determine the best way to fulfill a product order.

Source-to-pay (S2P) is a process that starts with finding, negotiating with, and contracting the supplier of goods, and culminates in final payment for those goods. S2P software relies on technology, big data, and digital networks to create procurement efficiency.

Sanction Request (SR) refers to a concise and confidential note that's used for taking approval from management before processing purchase order against a purchase request.