Which practice helps companies achieve higher quality and lower prices?

The practice that most effectively helps companies achieve higher quality and lower prices is multi-sourcing. This approach involves procuring goods and services from multiple suppliers rather than relying on a single source. By diversifying suppliers, companies can take advantage of competitive pricing, which can drive down costs. Additionally, having various suppliers increases the chances of sourcing from those that offer better quality products or services, as companies can evaluate and select the best performers.

Multi-sourcing also provides greater flexibility and reduces the risk associated with supply chain disruptions. If one supplier encounters issues, companies can shift their demand to others, thereby maintaining quality levels and cost efficiency. This strategy ultimately empowers businesses to negotiate better terms with suppliers and fosters a healthy competitive environment among them.

In contrast, single-sourcing can lead to dependency on one supplier, which may increase risks and limit competitive pricing advantages. Outsourcing refers to delegating certain business processes to third-party providers, which might not inherently ensure better pricing or quality unless managed carefully. Vertical integration involves a company taking control of its supply chain by owning its suppliers or distributors; while it can lead to benefits, it often requires significant investment and may not guarantee cost efficiency.