What is a typical feature of companies engaged in multi-sourcing?

Companies that engage in multi-sourcing typically work with multiple suppliers for the same products or services. This strategy is employed to create competition among those suppliers. By having more than one source, companies can leverage competitive pricing, negotiate better terms, and foster innovation among their suppliers. When suppliers know they are in competition with others, they are often motivated to improve their offerings, whether that be through price reductions, enhanced service levels, or innovative product features. This competitive environment benefits the purchasing company by ensuring they can achieve better quality, cost-effectiveness, and flexibility in their supply chain.

In contrast, an increased reliance on a single provider can lead to vulnerabilities if that provider fails to meet expectations or faces disruptions. Multi-sourcing also tends to diversify supply chain risks rather than increase them, promoting resilience against market fluctuations or other external factors. Lower product quality is typically not an inherent feature of multi-sourcing; instead, this strategy often leads to improved quality through competition.