Single and Multi-Sourcing Models

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Once an organisation decides to outsource, one of its biggest decisions concerns which sourcing model to adopt. Organisations often fail to devote sufficient time to this decision, because they focus immediately on how to achieve:

?? Increased cost savings.

?? Value for money.

?? Better service levels.

?? Access to best practices.

?? Greater innovation.

They also tend to get caught up too quickly in the details of procuring and preparing the tender, selection criteria, contract and service description documentation.

Organisations often simply miss the opportunity to stand back and analyse one of the first fundamentals of outsourcing: what type of sourcing model will best suit my organisation?

Since outsourcing has developed as a management tool, industry debate has focused on the respective merits of:

?? Single sourcing. This is the original sourcing model, used to deliver 'mega-deal' outsourcing transactions. A single prime supplier provides the full scope of the services 'end-to-end' throughout the duration of the outsourcing (see below, Single or multi-sourcing model?:

Single sourcing).

?? Multi-sourcing. This is also known as 'best-of-breed' multi-sourcing. The customer allocates the provision of the full scope of services to separate suppliers, either:

?? in parallel (see below, Single or multi-sourcing model?: Multi-sourcing); or

?? as a hierarchy (see below, Alternative sourcing structures: Supplier supervision

sourcing).

Five years ago, single sourcing was by far the most common structure. Now, more and more organisations have moved to multi-sourcing.

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Published In: Business Organization Updates, General Business Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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