MU insights | What is multiple sourcing in supply chain?

What is multiple sourcing in the supply chain?

Companies have used the outsourcing model for a long time, and it has become popular among companies that need specific supplies to cater to their growth. Companies adopting this model often doubt the effectiveness of hiring only one provider to meet their procurement objectives.

Instead, they started using a new approach involving different vendors in their business, called multi-sourcing. Supply chain management increasingly uses outsourcing concepts and is growing their companies by getting professionals on board. 

Most businesses consider outsourcing a crucial part of the procurement strategy to boost performance and advance in the competitive race. Here, you will understand everything about multi-sourcing in supply chain management.

What is multi-sourcing?

Before you learn more about multi-sourcing, you should understand the basic concept of outscoring. Outsourcing is the process of getting services and goods from any third-party supplier. This is mostly used to reduce costs and add specific skill sets into the company structure to get a service or product without needing much in-house investment to finish a task quickly. Multi-sourcing is also known as multiple-sourcing. It is an outsourcing approach in which the services or products are obtained from different suppliers and are needed to conduct business instead of the usual single outsourcing method. 

Is multi-sourcing ideal in supply chain management?

Leveraging multi-sourcing may bring flexibility and mitigate the risks of supply chain issues from unexpected events, including natural disasters or the very recent pandemic outbreak. On the other hand, working with many suppliers can add complexity to the supply chain, making it challenging to manage different suppliers. To understand this concept of multi-sourcing in supply chain management, you can review its pros and cons. 

Advantages of multiple suppliers

  • Risk deduction

Having to rely less on individual suppliers can increase flexibility in the supply chain if there is something wrong with one of the suppliers. 

  • Supply chain stability

Diversifying the supply chain can also reduce significant risks across services or products. 

  • Higher product quality

Having the best products and services quality also at the ideal prices because of a bigger resource pool can get you ahead through multi-sourcing 

  • Innovation

It can help you build innovation because there will be more competition, and hence, each supplier will strive to be the best one you have.

  • Negotiation

You will also be able to monitor which of your suppliers are ideally performing, which can help you make better deals in the future for your supply chain management.

Cons of applying multi-sourcing?

  • Administration costs

It can potentially increase the overhead costs of management linked to managing and communicating with many suppliers. 

  • Supplier management

Hard to build and also maintain an ideal relationship with different suppliers simultaneously. 

  • Quality control

There is an evident challenge of keeping track of efficiency and quality control. 

  • Integration difficulties

When many suppliers come and take over different parts of a single product, there may come issues in integrating them that can result in additional time and cost required. 

Other than these primary benefits of having multiple suppliers and some drawbacks, a few external factors also influence whether you must adopt multi-sourcing. Small businesses will have less flexibility in picking suppliers because of the limited budgets and extreme labor. Hence, the simple answer for single sourcing vs multiple sourcing, which is better, will depend on your needs and company size. Each factor will lead you in a different direction, which is best for you in your present situation. 

Single sourcing vs multiple sourcing ideal?

Picking between these two while doing supply chain management mainly depends on your situation and the products or services you obtain externally. When you require customization, one product, or wholesale, or if you wish to wholesale many items with small MOQ and can also find them from a single supply, single sourcing is ideal. 

But if you need to customize many products and can’t obtain them from a single supplier, or if you wish to find factories to produce many products with larger MOQ to reduce overall costs, the multiple-sourcing strategy is ideal for your business. 

MU Group can help you make your supply chain management a success. MU Group can be your competent assistant in providing complete support in supply chain management. It is a corporate group that boasts the largest independent export volume and the largest number of employees in Zhejiang Province. MU Group’s main business is supporting purchasing management and design for various European and American customers throughout Asia.

What MU Group can offer?

  • Market research 

MU group can conduct thorough market research to fully understand what you demand as consumers and how they can meet different market trends.

  • Data analysis 

Then, specific data analysis is used to interpret research findings that can shape informed strategies.

  • Product development and design 

The product’s design and development align with market requirements defined in the previous stages.

  • Procurement services and management

MU group services also entail procurement management and sourcing the ideal suppliers and materials. 

  • Packaging design

MU Group designs packaging that is appealing and functional and is also created to enhance product value. 

  • Product testing and quality control 

Product quality and compliance are also ensured through continued testing and quality control.

  • Procurement agency financing

MU Group offers you finance solutions that can support the procurement process financially.

  • After-sales support

The complete process is concluded with quick sales support that ensures customer satisfaction and continued improvement based on feedback.

The MU Group professionals who offer you services and products from MU Group support the entire supply chain management. You might not know their quality and services if you look for suppliers or products to outsource. But through MU group, you can rest assured that you will get to hire top-notch quality workers in any case. 

Your money and time will be saved, and you can enjoy stress-free conduction of work processes throughout your company. Along with this, the MU group can also help you integrate and arrange shipments. This can help you save costs and gather all the needed items in one shipment. This can also let you enjoy having multiple suppliers, as MU Group will handle them for you.

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