From single to multiple sourcing and vice versa: insights into the process of changing strategies

Abstract

Purpose: The aim of this article is to identify the motivations driving the process of changing sourcing strategy from single sourcing to multiple sourcing or vice versa. Design/Methodology/Approach: Ten cases of sourcing strategy changes were investigated. A qualitative research method is used to uncover the richness of these change processes. Findings: Most of the advantages and disadvantages stated in the literature were confirmed. Identical objectives(cost cutting and quality improvement) were present in all cases, although changes took place in opposite directions. Contextual factors, such as standardisation and supplier base reduction efforts shape purchasing strategy more than previously thought. The dynamic nature of the product lifecycle also seems to be an important determinant. Research limitations/implications: Although the results of qualitative case study research can only be "generalised" in a limited way, the case details help to identify the dynamics of sourcing strategy switches and to interpret the rationale behind these moves. Confirmatory follow-up research covering both the demand and supply side of the market is needed. Practical implications: Switching sourcing modes is of strategic relevance to managers as lifecycle costing managers are influenced by them. Managers should plan these decisions more effectively, evaluating the factual pros and cons of a proposed sourcing mode switch and taking the dynamics of supply markets into account. Originality/value: The importance of the different motives for sourcing strategy changes clearly varies with the dynamism of the context(market situations and strategic intentions of buyers). A model linking the buyers' portfolio matrix to the product life cycle on the supply market is proposed.