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One Suppler or Two or More?

Posted 2/13/2021

Why would procurement want to contract with more than one supplier for similar products and services when one can supply all requirements at very competitive prices?

Procurement need only manage a single vendor for those commodities/services, why make more work for ourselves?

There are several reasons why – let us look at a few.

Capacity: you need a project completed by a certain date, contracting with multiple suppliers could enable you to complete the project on time.

Development: your organization seeks to diversify the local economy by contracting with multiple small businesses to assist them to build expertise and resources for the future. The same could apply on a national scale.

Redundancy: Supply chains can break and even a temporary break can prove critical for the supply of essential goods and services. An example of this is top of mind everywhere.

Unbundling: Your organization has mandated societal procurement objectives that include contracting with small and social enterprises that employ and train persons with employment barriers. Procurement could act as project manager by breaking down the project into component parts to enable small and social enterprises to compete for those contracts. The social and economic returns can be significant, and your job satisfaction will be rewarded by making deals that do good.

So, one supplier or multiple suppliers? This is a strategic question that could contribute to the planning of every significant procurement. It is a question that should be resolved through the procurement process and documentation.