Sole Sourcing vs Single Sourcing — 6 Crucial Differences

Hey, We know what you want. You are here to know sole sourcing vs single sourcing. Do not worry, we are here to help you. 

We will give the key differences between sole sourcing and single sourcing that we will discuss further in this article.

Sole Sourcing

In sole sourcing, the organization has no choice but to select a supplier as only a few or one supplier provides that product or service.
The terms are in the hands of the supplier as it is the only one that can provide the specific products or services of the organization.
The organization has no option to compare prices as only limited or one supplier provides their needed products or services.

Single Sourcing

In single sourcing, the organization has the power to choose which supplier they will select to provide their needs.
The terms are in the hands of the organization as they have the power to choose the supplier.
Better decision-making as the organization can compare prices with other suppliers.

The procurement department has a lot of ways to acquire the goods or services that it needs to operate. It is crucial for them to find the right suppliers in order to have an effective supply chain. But sometimes, using sole sourcing or single coursing is necessary for the procurement process.

We must know the definition of sole sourcing and single coursing before we explore their differences. In this article, we will also explore its advantages and disadvantages. We will compare sole sourcing vs single sourcing to see what is more efficient to do. 

After this article, you should be able to distinguish the difference between sole sourcing and single sourcing. You will also be able to use these two in your procurement process journey. 

Sole Sourcing 

Sole sourcing pertains to a situation when there is only a single supplier that provides the product or service that you need. These are the types of products or services that are unique and can only be found through a single supplier. The business has no other choice 

Sole suppliers are usually those who manufacture specialized parts or are the only ones left selling an outdated material. In some instances, businesses choose sole sourcing because it is the only supplier that can handle their requirements. 

Click here for in-depth learning of sole sourcing and how it is done. 

Single Sourcing

Single sourcing refers to purchases when there is more than one supplier who provides the product or services that you need. The company selects only one among the suppliers who can provide what they need. For example, if your company chooses to buy Samsung laptops instead of any other brands that also sell laptops, then that is single sourcing. 

The company may choose based on what it thinks it needs. It may choose the other due to the difference in prices. The company may also choose based on the quality of materials the supplier provides. 

The Main Difference between Sole sourcing and Single Sourcing

Now that we know their definition, we can clearly see their differences when it comes to sourcing suppliers. 

The main difference between sole sourcing and single sourcing is choice. We see that they both have the power to choose whom to contract. But who has the power to choose?

The power to choose lies to the company when we talk about single sourcing. The company has the decision whether they will select the supplier base on the terms that they want. This is favorable for companies as they can get the cheapest supplier possible. The company can easily replace the supplier if something happens that will affect the company’s operation. 

On the other hand, the power to choose in sole sourcing is with the supplier. In this case, the supplier has the freedom to set the price, delivery, and other terms that will favor them. The supplier can do this because it is the only one who can provide what the company needs.

In simplest terms, it is the supplier who makes the call. The business will contract the supplier even if it costs more due to the fact that it needs its product or services. The business is restricted to following all the terms that the supplier wants. 

Editor's note:

Hi there! My name is Marijn Overvest, I'm the founder of Procurement Tactics.
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Advantages and Disadvantages of Single Sourcing

Advantages

Select your supplier on your own terms.
Compare prices to determine your best match based on your needs
Can easily track and manage the supplier.
Supplier’s movements are visible to determine its performance

Disadvantages

Dependency on one supplier may be crucial in meeting your demands.
Customer satisfaction may decrease due to unforeseen situations such as being understaffed and failure to deliver on time.
Increased risk of supply disruption
Prone to be destabilized by a catastrophic event like the COVID-19 pandemic.

Advantages and Disadvantages of Sole Sourcing

Advantages

Improving the buyer-supplier relationship is high
Long-term relationships may give discounts or other incentives as it considers you a partner.
check the supplies and ask your supplier to fix the issues if there are any

Disadvantages

The terms are in the hands of the supplier.
the supplier may lean on what is favorable to it.
When calamity arises, it becomes difficult for the manufacturers to meet their demands.

To Conclude

Sole sourcing vs single sourcing’s main similarity and difference is choice. Both processes have a choice but the difference is where the favorable outcome lies. Sole sourcing is mostly favorable for the company and single sourcing is beneficial for the supplier.

Nevertheless, sole sourcing vs single sourcing has its own advantages and disadvantages. It is at the company’s discretion to choose which of the processes it may need. If it needs an item that only one supplier provides, then it sticks with the sole sourcing. On the other hand, if many are providing the same goods or services, then it will select the best match for its needs. 

Frequently Asked Questions

1. What is the main difference between sole sourcing and single sourcing?

The main difference between the two is that an organization can select a supplier from the various bids in single sourcing. 

On the other hand, the organization has no option to choose from single sourcing as there is only one supplier who provides their needed products or services. 

2. What is sole sourcing?

Sole sourcing pertains to a situation when there is only a single supplier that provides the product or service that you need.

3. What is single sourcing?

Single sourcing refers to purchases when there is more than one supplier who provides the product or services that you need.

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