Single versus Multiple Sourcing: Investigating the most profitable scenario for OEMs

Abstract

This thesis aims to explain how a specific Truck OEM chooses how many suppliers to source from. The main purpose of the study was to investigate the benefits and disadvantages of single and multiple sourcing in a specific Truck OEM. A case study has been used in order to conduct the research, with semi-structured interviews to collect the data. The empirical data show that a buyer-supplier relationship and collaboration in regards to common product development and progress is stronger in the single sourcing strategy since the amount of time spent is huge. The main focus of buyers should be cost reduction in a long-term perspective. Further, the empirical data show that volumes, investments and manufacturing locations do not make shifting easy from one supplier to another. Securing budgets and resources for multiple investments can be challenging. With the global markets expanding more and more, it is critical that each organization keeps track of all changes in the purchasing world, and how different scenarios in the supply chain are realized. In fact, many factors determine whether a buyer follows the single or the multiple sourcing strategy. A checklist that could be consulted to buyers when making sourcing decisions, can better prepare them for choosing between the two strategies.