The Benefits of Single Source Manufacturing derive from common sense. It’s not often in the business world that a company will choose a sole vendor or manufacturer, excluding all others. Companies like flexibility. They know that reliance on just one manufacturer may turn into an anchor around their neck, pulling them down if the provider of goods and service goes under.
The terms of sole versus single manufacturer confound some. Fayetteville State University provided a report clarifying what single source meant: “Single source purchases frequently involve a vendor or contractor whose product or service is distinguishable from all others in the market …” In this context, “single” means “the one among others.” It’s a choice based on several factors. By exclusion, sole source manufacturing means just that: only one manufacturing concern that makes the product or provides the service.
The advantages of single source manufacturing abound. According to Carol Ptack in her book entitled ‘The Quantum Leap: The Next Generation’, five factors make single source the better choice.
When a company has to deal with more than one vendor or manufacturer of a product, food or service it is only natural that issues are likely to arise. Each supplier is different and they have different personnel. Handling the problems that arise need more than a business approach but a people approach too.
Adding to the problem come issues like logistics, coordination and product quality and uniformity and more. When a new supplier comes on board, the resulting problems magnify beyond a fractional increase — a multiplication occurs. Instead of tossing just one ball to a juggler, it is more like tossing two or three balls to the number already circling through the air.
- Consolidate by Volume:
Consolidation by volume is the child of supply base reduction. Simply, the method used to reduce suppliers. The complexity arises in the result. It is difficult to directly quantify. A great example is what they’ve learned in China. Science Direct reports,”[A]n empirical study of 398 Chinese manufacturing companies, it is found that volume consolidation enhances supplier performance, buyer learning from the supplier, and its environment learning ability.” None of these factors bears a an exact measurement, but identifying the results of consolidating by volume only prove the success of this strategy.
- Consolidate by Commodity:
This is a reference to the supply chain of products. Companies want to secure and strengthen the supply chain by selecting suppliers that have gone through vetting and continued assessment updates. Since contracts with suppliers arise through negotiations, companies using these suppliers have less risk of experiencing supply chain disruptions.
- Maintain Better Control:
Dealing with only a few manufacturers, or even one, allows a company to maintain control over their own production and that of the supplier. There is that one-on-one relationship that allows for greater knowledge of the supplier’s business. As pointed out above, the dynamics of a relationship come into play that reveal an advantage fostered by a direct relationship and mutual goal of continued business operations.
- Monitor Quality & Supplier Performance:
Though seemingly like an overlap of the other above factors, the direct relationship creates an atmosphere where the inspected product has a direct link to the supplier. The flow of information regarding progression of a business operation is distinct and each party knows what information reached the other, knowing the right individual received the communique. Performance proves more accurate under the circumstances, because each party knows the other is looking over the shoulder of the other.
The benefits of single source manufacturing are proving tremendous. Proof lies in the fact that most manufactures have adopted the strategy throughout the world. Some drawbacks have surfaced as expected. That is true with any and all strategies. Most resolves are common sense and businesses find it easy to avoid the traps.
‘The one among others’ means that one manufacturer or supplier that best meets the needs of a company’s business operation. But it also has another meaning. It’s the manufacturer that stands out among others.
Contact us, Pli-Dek Systems, manufacturer of a wide-variety of specialty coatings, to learn why we are the ‘one-among-others’.