What is dual sourcing in SRM?

Dual sourcing refers to the practice of procuring critical components from multiple suppliers to mitigate risk. This strategy is employed to enhance supply chain resilience by reducing dependency on a single supplier, which can expose a business to various risks, such as supply disruptions, price fluctuations, or quality issues. By engaging more than one supplier, organizations can safeguard against potential delays, quality inconsistencies, or crises that could impact business operations.

This approach not only provides a fallback option in case one supplier cannot deliver, but it also fosters competitive pricing and can improve negotiation leverage. Such a strategy aligns well with risk management practices in supplier relationship management (SRM), emphasizing the importance of maintaining a diverse supplier base for critical components.

In contrast, the other options focus on different aspects of supplier management that do not align with the core definition of dual sourcing. For instance, enhancing supplier relationships through meetings is about relationship management rather than risk mitigation, while using a single supplier leans toward consolidating sourcing that can create vulnerabilities. Lastly, reducing the number of suppliers for cost-cutting is a strategy that typically emphasizes fewer partnerships rather than the risk-spreading inherent in dual sourcing.