Multi-sourcing models are becoming increasingly popular in recent years as businesses have begun to recognise their varied benefits. By working with multiple suppliers, businesses can spread their risks and avoid supply disruptions that could result from a single point of failure. This can be especially important in industries where supply chain disruptions have significant consequences.
While multi-sourcing can be an effective strategy, it can also be complex and challenging to manage. In this blog post, we’ll explore the multi sourcing model, its benefits, and above all, how by deploying certain strategies, you can succeed in a multi-sourcing model.
Multi Sourcing: A quick glance
Multi sourcing is a procurement strategy in which businesses source their goods and services from multiple suppliers rather than relying on a single supplier. Multi sourcing models can help businesses to reduce risk, improve quality and cost-effectiveness, and align with their values, making it a preferred procurement strategy for many organisations.
A recent IDC Report found that by 2024, nearly 40% of Asian-based manufacturing companies will have implemented more balanced multi-shoring sourcing strategies to better address the risk that result in a 15% point improvement in supply reliability.
Does multi sourcing matter?
In today’s fast-paced business environment, companies are increasingly turning to multi sourcing models to optimise their supply chains and reduce risks. Here are some reasons why multi sourcing matters, and why businesses prefer to stick to this model.
- Multiple sourcing provides a safety net as there is less reliance on any one supplier in the event of supply scarcity or production challenges
- Provides greater adaptability to handle unforeseen circumstances that could endanger capacity
- As more suppliers can satisfy peak demand, there will be fewer bottlenecks Competition frequently gives providers an incentive to increase cost and service
- The buyer frequently has more negotiating power when suppliers are competing
Must-deploy strategies that can help find success in the multi sourcing model
As mentioned above, considering its heterogeneous working model, multi sourcing can throw up some unexpected challenges for businesses. However, here’s a rundown of strategies you apply to thwart those challenges and find a balance.
1. Establish clear communication and expectations
Clear communication and expectations are among the most critical success factors for a multi-sourcing model. All parties involved must be aware of their roles and responsibilities, as well as what is expected of them. This includes setting clear targets for quality, delivery times, and pricing. A well-drafted contract that outlines each supplier’s role and responsibilities is a good way to ensure everyone is on the same page.
2. Create a partnership culture
In a multi-sourcing model, all suppliers must work together to provide the best possible outcome for the business. Encouraging a partnership culture is essential to achieving this. This means building relationships with each supplier and creating an environment of mutual respect and trust. Regular communication, collaboration, and information sharing are all critical to developing a partnership culture.
3. Network with other businesses
Networking is a valuable tool for any business, but it’s particularly important for those operating in a multi-sourcing model. Networking with other businesses in your industry can help you find new suppliers, learn about best practices, and even identify potential partners. Attending industry events and trade shows, participating in online forums, and joining professional organisations are all excellent ways to expand your network.
4. Leverage technology
Technology can be a game-changer for businesses operating in a multi-sourcing model. Cloud-based solutions, for example, can provide real-time visibility into supplier performance, inventory levels, and delivery times. This information can help you make informed decisions and proactively manage risks. Similarly, tools like supplier scorecards can help you track supplier performance against key metrics and identify areas for improvement.
5. Be flexible
Finally, flexibility is critical when operating in a multi-sourcing model. You must be prepared to adapt quickly to changes in the market, supplier performance, or your business’s needs. This may mean changing suppliers or modifying your supply chain strategy. Being open to change and willing to take calculated risks can help you stay ahead of the competition and achieve success in a multi-sourcing model.
In conclusion, succeeding in a multi-sourcing model requires a combination of clear communication, partnerships, networking, technology, and flexibility. By following these best practices, businesses can build a resilient and efficient supply chain that delivers value to their customers and stakeholders.
At Blue Helion, we equip businesses with strategies that help them reduce costs and grow. Our outsourcing advisory firm specialises in offering insight-based advisory and execution support to operationalise plans for our clients in the Indian market.
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