Which practice can help mitigate risks in supplier sourcing?

Implementing dual sourcing strategies is an effective practice for mitigating risks in supplier sourcing because it diversifies the supply base. By sourcing from two or more suppliers for the same materials or services, a company can reduce its dependency on a single supplier. This approach helps to ensure that if one supplier faces disruptions, such as financial issues, natural disasters, or capacity constraints, the other supplier can continue to fulfill orders, maintaining supply continuity.

Moreover, dual sourcing encourages competition among suppliers, which can lead to better pricing and improved service levels. In scenarios where market conditions shift or where materials become scarce, having multiple sources can provide flexibility and adaptability, allowing companies to respond quickly to changes. This strategy ultimately builds resilience in the supply chain, enhancing a company's ability to manage risks effectively.