Answer to Question #271265 in English for LERATO

Question

Bose is moving toward single sourcing many of its purchased part requirements. Discuss why the company might want to do this. Are there any risks to that approach?

Answer 1

Benefits of single sourcing

I) Administrative efficiency- there are fewer telephone calls to make and suppliers to visit

II)Lower inventory cost- need for incoming quality inspection can be minimized

III) improved quality product- the firm can work with the supplier to improve the quality of the suppliers products.

IV)Access to new technology- manufacturer will be willing to share new technology.

Risks of single sourcing

Increased vulnerability of supply

Increased risk of supply interruption

Greater dependency between your business and the supplier.