Single Sourcing
Prepared By
David Bach
Boise State University
October 9, 2002
What is Single Sourcing?
 Also referred to as Sole Sourcing
Definition: Using One Supplier for a
Single Component.
Objectives of the Training
 Learn About Single Source Practices
 Where Can Single Sourcing Be Applied
 How To Set Up Single Source Processes
Welcome
 Introductions…
History
 Why was this developed?
 How did Single Source become popular?
 Where does Single Source fit?
Why Single Source
 Supplier Reduction
 Develop Partnerships with Suppliers
 Lower Costs
 Increase Quality Improvements
How Did This Become Popular
 Need to be able align strategy with
suppliers
 Improve Communication
 Japan Purchasing Practices:
World-Class
Where Does Single Source Fit?
 Organizations with JIT processes.
 Where opportunity for quality
improvements exists.
 In industries where technology changes
rapidly.
 In companies looking to gain competitive
advantage by reducing suppliers.
Advantages to Single Source
 Strategic Partnerships
 Opportunity for lower costs
 Improved communication
 Quality improvement Potential
Disadvantages
 Disruption in the Supply Chain…
•
•
•
•
Labor
Transportation
Pricing
Quality
 Needs to be continually monitored
 Narrow Focus
Brainstorm
 How can Single Sourcing be applied in your
organization?
 Pros and Cons?
Getting Started
Slide 1 of 3
 Supplier Evaluation
•
•
•
•
Current Suppliers
Target Number of Suppliers
Filters
Address individually
 Qualify the Supplier
• Criteria
Getting Started
Slide 2 of 3
 Enter the Agreement
• Contract
 Open Lines of Communication
• Integrated Systems
– EDI
Getting Started
Slide 3 of 3
 Continue to Develop Continuous
Improvement Processes
• Communication
• Quality
• Cost
Companies That Practice…
 Tyco Electronics
 Xerox
 Toyota
 Mercedes Benz
 Dell
 State University of New York
Real World Example
Slide 1 of 3
 Emerson Electric Company
• Successful integration of single source
agreements for “big buy” materials
• Partnered with W.W. Grainger
– Approached Emerson
– Considered to have “best in class suppliers.”
Real World Example
Slide 2 of 3
 Plan roll out considered deliberate
 Total integrated supply management at 27
sites.
 Potential to save millions of dollars a year.
• Reduced Inventories
• Streamlined operations
Real World Example
Slide 3 of 3
 Increase in Quality
• Reduction from 2000 defective parts per
million to 200 dppm, in just one plant alone!
 Management views as a “powerful
competitive weapon.”
Exercise Slide 1 of 2
 Teams
 Identify a component that could potentially
be a single source item in order to:
• Increase Quality, decrease inventory and cost.
 Develop the Process
Exercise Slide 2 of 2
 What have we learned?
 Does it seem helpful?
 Can you and/or your department
implement this strategy? Why or Why Not?
Conclusion Slide 1 of 2
 Single Source is a strategic method to set
up partnerships with suppliers in order to:
• Reduce Inventory
• Manage Lower Cost and Price
• Increase Quality
Conclusion Slide 2 of 2
 Single Source can be applied in many
organizations
 Setting up Single Source is a planned and
managed process that is ongoing, even
after successful implementation.
Works Cited
Slide 1 of 1
“Automotive Still Taking Risks with Single Sourcing.”
Sep 30, 2002. www.manufacturing.com/news/
kpm/kpm104.html.
Avery, Susan. “Emerson’s MRO buying becomes a
competitive weapon.” Purchasing, Oct 17, 1996
v121 n6 p38.
Emerson Electric Company Web Site.
www.gotoemerson.com
Works Cited
Slide 2 of 2
Foster, S. Thomas. Managing Quality: An Integrative
Approach. Prentice Hall, 2001.
McNarmara, James. “Tyco buys electrical
technology infrastructure co…” Electronic Buyers
‘News. Nov 27, 2000. p14.
Tuttle, Al. “Becoming A Single Source.” Industrial
Distribution. Sep 2001. pp 47-49.