single sourcing

Purchasing from a single supplier, a practice traditionally adopted by Japanese companies. At first sight it might seem that multisourcing from suppliers is likely to produce more competitive prices. However, single sourcing has distinct advantages, not least that a company can build a strong, mutually beneficial relationship with its supplier. It may also keep prices down by purchasing in bulk. The principle disadvantage of single sourcing is the total reliance placed on that supplier. A setback for the supplier, financially or through an event such as fire or an earthquake, could place the purchaser in great difficulty.