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Is sole sourcing good?
August 7, 2007
Industry Week’s August issue has a section for purchasing. This is good as we are being recognized as “Purchasing” not supply management, but purchasing. The article is written by Traci Purdum, however what really brought the article to my attention is the person who is furnishing the information, “Elaine Whittington.”
I was at the ISM’s 85th annual international purchasing conference in New Orleans when Elaine was the 70th recipient of the J. Shipment Gold Metal Award. The second woman to receive this award since it was first presented in 1931.
Elaine’s list of advantages and disadvantages of a sole source supplier:
What are the advantages of using a single/sole source supplier?
- Consistency of quality and delivery;
- The supplier understands your needs and requirements;
- The supplier can be involved early in the design process;
- A cooperative rather than competitive relationship
What are the disadvantages?
- A catastrophic event stops production;
- Less negotiation leverage;
- The supplier may fear dependency on your business;
- The supplier may become complacent;
- Greater exposure to risk (what happens when a supplier is working at capacity?)
Early in Whittington’s career, someone bet her $10 that she couldn’t get a job in Lockheed’s purchasing department because its purchasing staff of nearly 300 had no female employees. Not one to be intimidated, Whittington accepted the bet and won, working at Lockheed (now Lockheed-Martin) in California from 1966-1991.
In Whittington’s acceptance speech of the award, she mentioned a topic near and dear to her: “For the future of the purchasing profession, more universities must offer a degree in purchasing;” she says “We won’t be recognized as a profession until they do.”
I still like to hear the word purchasing. That is what we do. We buy stuff.
Posted by Mary Walker on August 7, 2007 | Comments (3)
In response to: Is sole sourcing good?
Mike O. commented:
Shouldn't this be titled "Is Single Sourcing Good?"? I have understood that a sole source is when there is only one source available to satisfy a requirement. You might require a sole source when buying a spare part that is only furnished by the original supplier. This is a sole source. A single source is when there are multiple sources available but, for some reason, it is agreed to solicit only a single source. This is a pretty good definition. www.ogs.state.ny.us/purchase/snt/awardnotes/tcgDefinitions.html (slightly reworded below) You can find others on the web. Sole Source "Sole source" means a procurement in which only one Contractor is capable of supplying the required product or service. Single Source "Single source" means a procurement in which although two or more Contractors (or participating resellers) can supply the required product or service, but for material and substantial reasons, an award is made to a single Contractor (or participating reseller) over the other(s) without competitive bidding.
In response to: Is sole sourcing good?
Mary commented:
Mike, Thanks for your comments. You are right, there is a distinquished difference in a sole source and a single source. Very good point to bring up. Mary
In response to: Is sole sourcing good?
Sonya Semenoff-Torrise, C.P.M. commented:
There are instances where sole (single) source procurements are not only desired, but required. Products that must interface with the like items, or designated matching product concerns must be recognized as legitimate instances where single or sole source procurements are paramount. Keeping in mind that probably under the original solicitaion, many firms were allowed to compete and one firm was chosen and now the Buyer needs to purchase spares or replacement parts. So it is not necessarily a matter of eliminating competition altogether.