Over the years, many companies have worked hand in glove with a single supplier to produce their products. This provides personal attention by the producer and often puts them on good terms as far as service goes. However, many business owners are exploring new options as the global economy grows.
Many things can change over the years, and if a company has only a single supply line, they are in greater danger of it being disrupted for some reason or other. To help mitigate this possible problem, many businesses use low cost country sourcing or some other type of multi-sourcing. Here are some of the advantages of doing business this way.
Risk Management
While there is always some risk that an issue will arise with a supplier, more companies are coming to understand what that risk can mean for them if they only have a single supplier. They are finding ways to minimize possible issues. Whether this means sourcing locally as well from several different countries or just working with a number of different companies in the same location, spreading out your orders between suppliers can help you survive natural disasters, trade disputes or problems of any kind at the individual plants.
Cost Efficiency
When you are outsourcing your parts to several vendors, you have a little more leverage with the price points you have to accept. You can increase the amount of product produced by the supplier that costs you less and reduce the amount ordered from the pricier manufacturer. You may be able to negotiate better pricing if you have options from a few different suppliers.
Material Availability
Working with a number of different suppliers in various locations may allow you to have more access to certain materials required for your products. If one supplier is dealing with a shortage of raw materials, another may be dealing with an oversupply of the same material. Diversifying your vendors can help you reduce dependency on a single supplier.
Quality Assurance
When you work with a number of suppliers, you can make a point of comparing the products they create for you. You may find that some of them are better or of higher quality. This can help you as you make decisions about future new product orders or prototypes.
Take the time to do some research and decide if multi-sourcing is right for your business. It may be the step that boosts your bottom line.
