A best practice that should be used more: Single sourcing
By Ken Stork -- Purchasing, 9/16/1999 6:00:00 AM
The July 15 issue of Purchasing contained results of an interesting survey--Purchasing's look at the "profile of the purchasing professional." These surveys provide an excellent method of comparing trends that have occurred in your company with trends in overall industry. Done every two years in the past, the profile survey will now be done annually.
One segment of the report highlighted one of my favorite topics--single sourcing. I was very disappointed to read "purchasing professionals still prefer to have multiple sources for a given item, but not by as wide a margin as two years ago. The percentage of survey respondents who prefer multiple sources slipped to 79% from 87% two years ago."
About 15 years ago I became a strong advocate of single sourcing, while remaining very cautious on sole sourcing. For at least 10 years, single sourcing has been recognized as a best practice.
What causes nearly 80% of surveyed purchasers to still prefer multiple sources for a given item? I believe a commodity supply market requires at least two active suppliers, and given items are supplied by the best single source for each item. Could it be that most of the survey respondents haven't benchmarked the merits of effective single sourcing? I suspect so, as prior Purchasing surveys on benchmarking reflected below-average use of this important process of improvement.
Sixty-eight percent of respondents say they practice just-in-time (JIT) delivery of materials. But if you have multiple sources--as 79% still do--it's very difficult to excel at JIT.
Using multiple sources is an underlying reason for other results of the survey. Purchasing pros report that time spent doing routine paperwork has been constant since 1987. Multiple sources add to clerical and administrative efforts. And the number-two problem reported was unreliable suppliers, at 10%. This is typical of multiple sourcing because the customer fails to improve or eliminate unreliable suppliers.
More food for thought: Saving money/cost cutting ranked number one as the most satisfying aspect of purchasing, selected by 29% of survey respondents. When done well, single sourcing results in great improvements in price, not to mention quality, cycle time reduction, early supplier involvement, and other benefits.
Eighty percent of polled buyers say they're taking steps to consolidate purchases with fewer suppliers. But given the prevalence of multiple sources, it will take a very long time for most purchasers to get down to a properly sized supply base.
The cost of not knowing what you should about single sourcing can be a large burden for any business to bear. Companies that benchmark and implement single sourcing practices are likely to possess significant competitive advantages.
Stork is president of Ken Stork & Associates Inc. in Naperville, Ill., (630) 851-5445 or e-mail: ken@kstork.com. Formerly Motorola's corporate director of materials and purchasing, and a member of Purchasing's editorial advisory board, Stork focuses on consulting and custom educational programs in strategic sourcing and supply base management.
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