What is dual sourcing? | Definition from TechTarget (2024)

FAQs

What is dual sourcing? | Definition from TechTarget? ›

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.

Dual sourcing is a supply chain management strategy that involves engaging two suppliers to provide a specific component, material, product or service. While "dual sourcing" strictly means using two suppliers, it's often used interchangeably with "multi sourcing," which can involve more than two sources.

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.

Common benefits of multiple sourcing include: less reliance on any one supplier providing a safety net if a supplier runs into difficulties. more flexibility to cope with unexpected events that could jeopardise capacity. fewer bottlenecks as more suppliers are able to meet peak demand.

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. Many purchasers decide to single or dual source prior to issuing an RFP or tender based on certain assumptions.

Dual power supplies are circuits that generate two different output voltages from a single input source. There are numerous types and configurations possible. The most common configuration provides two different positive DC voltage outputs or two equal magnitude and opposite polarity DC voltage outputs.

Sourcing process includes every activity that revolves around identifying and assessing potential suppliers as well as selecting and engaging with an appropriate supplier who offers the best value.

While dual sourcing may offer a cost-advantage in terms of competitiveness of pricing, it can also have the opposite effect. Choosing to split volumes across multiple sources can lead to reduced economies of scale for example.

Additionally, you may have higher transaction costs, such as transportation, inventory, or quality control expenses. Furthermore, multi-sourcing can lead to reduced consistency and loyalty. You may experience variations in quality, standards, or specifications of the items you receive from different suppliers.

For example, you might choose two or more vendors to supply different types of office equipment, or two or more vendors to handle different aspects of your IT support. Multi-sourcing can increase your bargaining power, diversify your options, and encourage competition among your vendors.

Which is better single sourcing or multi sourcing? ›

Sourcing each product from multiple primary suppliers provides greater flexibility when adapting to disruptions in the supply base [18] and is more effective than single sourcing at mitigating the risks of high operating costs and low service levels [19].

Primary disadvantages of single sourcing include supplier control in bargaining, limited opportunities for the lowest price and limited product diversity. Additionally, if the single source goes out of business, it can leave the company in a bind, especially if there are delays in lining up new suppliers.

Here is an example of how an IT company might use single source procurement:An IT company is developing a new type of technology that has not yet entered the market. Because the company is creating an innovative product, the details of its development are confidential.

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.

When a business needs specific materials and goods, it may use the single-sourcing method to select one company to serve as its only supplier. Single sourcing can reduce cost and offer product exclusivity, which may differentiate the company from competitors.

Split sourcing is when a company uses two suppliers for the same product in order to increase the likelihood that the product will be available and for the company to source it cheaper and more effectively (Artiba & Elmaghraby, 1997; Goldsby & Martichenko, 2005).

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.

Second sourcing, in which two vendors are contracted to fulfill a company's production needs for a given part, and multi sourcing, in which three or more vendors are utilized, are hardly new concepts.