Single Source Procurement
Single source procurement is an order where you decide which suppliers offer the best price and quality for your specific need. In simple terms, it is the decision to select one certain supplier, although there are others who offer the same or very similar product.
The decision to go with a single source is often based on the price they offer and sometimes based upon a superior product to all other suppliers.
There are other factors that go into your decision such as past order accuracy, quality of the product and commitment to good service. Although deciding to go with a single source for your supply, there are other possible suppliers to switch to if necessary.
It is important to keep a record of why a specific vendor was chosen and what alternatives were considered. Keep this information in case anything were to change or you are unhappy with the service provided.
You should also make a note of what rationale was used to select the supplier and how the agreed-upon price was met and considered reasonable.
This way the process can be repeated to find an alternative vendor. A single source example would be if you are manufacturing golf balls and are looking for someone to supply the plastic outer shell.
There are probably several companies that would be willing to provide you with that service, choosing the best quality and the priced option is up to you.
Sole Source Procurement/ Proprietary Procurement
Sole source or proprietary procurement is defined as there being only one supplier of a certain good or product.
This vendor/ supplier is the only source for this specific input. Being either the only provider within a reasonable geographic region or a company that has created itself as a monopoly.
Often these products are extremely unique or made with a scarce resource/ material making these suppliers the only option.
When dealing with a sole source option, you are unable to switch suppliers as there are no alternatives available. Due to this nature, you can either try using something else to complete your production or change the requirements for your final product.
When deciding to work with a sole source proprietary the competitive process is surpassed. There is no bidding or squeezing you into a time slot between other orders.
There is simply a negotiation between you and the supplier to discuss what is a fair price and decide any other parameter of the deal.
Unfortunately, this is the only person to make a deal with so you may have to pay a higher price or ease up on some order restrictions to keep them interested.
A sole source example would be the computer company Dell, it’s accessories specifically. When you own a laptop, there are a few charging cables that will fit into the ports of most computers.
If you have a Dell and purchase a charger that fits, it will not work unless it is purchased directly through the company itself. So, you can find chargers that fit but do not charge, unless they are purchased straight from Dell.
There are several avenues to research the best supplier, that is if there is more than one available. With a sole source procurement, the entirety of the research process is instead spent on negotiation. Whereas single source procurement requires research and comparisons between suppliers.
Helping to ensure you receive the best quality product at the best price. Researching is time-consuming but will be very useful in saving you money and frustration in the long run. Here are some places to begin:
- Compare the same or similar products from different suppliers.
- Look through a product catalogue to see if anything similar is sold that could be of use.
- Reference price lists, but still get a quote as they often tend to be less than advertised.
- Investigate if there are industry standards surrounding the part you need.
- Previous customers of the supplier and their satisfaction rate.