The Disadvantages of Single-Sourcing

The concerns surrounding COVID-19 continue to ravage the globe with no signs of stopping anytime soon. Its impacts have greatly threatened the general public’s health and many precautions are in the process of being implemented as a result. Awareness regarding symptoms, cleanliness, and steps to take during possible infection have all been raised with a strong emphasis placed on following these procedures. Unfortunately, little notice has been brought up about the impacts on manufacturing. When people become sick, employee occupancy temporarily drops. During a crisis, entire plants and factories can be shut down for an indefinite amount of time. As such, for companies whom rely on single-sourcing supplies, COVID-19 has become a massive detriment to their businesses.

A “Break in the Chain”

One company being forced into downtime doesn’t seem like a huge contribution to the currently weakened economy that many countries are now facing, but in many situations, this is not the case. Businesses that utilize a single-source supply chain are in trouble and especially so for those that rely on partners in China, the epicenter of the COVID-19 outbreak. Analytics sourced from Dun & Bradstreet reveal that approximately 51,000 companies around the world have one or more direct suppliers in Wuhan and at least 5 million companies globally have two-tier suppliers there. The problem? Most of these companies based in Wuhan are currently shut down, leaving businesses that rely on single-sourcing within their supply chain helpless and in the dark. In essence, one break in the chain disrupts the entire process.

The Downsides of Single-Sourcing Supplies

It’s important to understand that single-source supply chains can be a great option for companies that want to have a steady and strong connection with specific part manufacturers to cut down on aspects like production cost and product variability. However, there are some disadvantages and risks that come with this type of operation that have become pronounced during a time like this. Any irregularities in business operations or current events can alter the functions of the chain including lack of supply, financial stability, or even a global concern such as COVID-19. As a result, multi-sourcing companies have been faring much better than their supply chain counterparts.

Stay Afloat During the Downtime

Having the ability to source parts from different manufacturers is key to avoiding an unfavorable situation to the likes of what we’re seeing with some companies today. Becoming flexible enough to acquire suitable parts for your assets from multiple manufacturers will provide the support your company needs to stay sustainable and productive. This way, in the event of any disruptions within the supply chain, operations can continue with minimal impact.