The Procurement Glossary » Single Sourcing

Single Sourcing

Sourcing & RFx

Definition

Choosing to buy an item from one supplier even though alternatives exist, usually to gain volume leverage or a deeper partnership.

Explanation

Single sourcing concentrates volume for better pricing and closer collaboration, but raises dependency risk. It differs from sole sourcing, where only one supplier is actually available. The concentration risk must be managed with strong contracts and contingency plans.

Example

The company single-sources its packaging to win tier-one pricing, backed by a contractual continuity plan.

Related terms

• Sole Sourcing — A situation where only one supplier can provide the required good or service, leaving the buyer no competitive alternative.
• Dual Sourcing — Deliberately using two suppliers for the same item to reduce dependency and supply risk.
• Supply Risk — The risk that supply of a good or service is disrupted, constrained or made more costly.
• Leverage — The relative bargaining power a buyer or supplier holds in a negotiation, driven by factors like volume, alternatives and switching cost.

Frequently Asked Questions

What is Single Sourcing?

Choosing to buy an item from one supplier even though alternatives exist, usually to gain volume leverage or a deeper partnership. Single sourcing concentrates volume for better pricing and closer collaboration, but raises dependency risk. It differs from sole sourcing, where only one supplier is actually available. The concentration risk must be managed with strong contracts and contingency plans.

Can you give an example of Single Sourcing?

The company single-sources its packaging to win tier-one pricing, backed by a contractual continuity plan.

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