Dual sourcing vs single sourcing: how to choose for each part

Single sourcing gets you the best price and the simplest relationship. Dual sourcing gets you a way out when a supplier fails. Neither is right for every part. This guide explains the trade-off and gives a simple way to decide part by part.

Four terms that are often confused

Term	What it means
Single sourcing	You buy from one supplier by choice, although others could make the part
Sole sourcing	Only one supplier can make the part, because of a patent, a process or a certification
Dual sourcing	Two qualified suppliers, with the volume split between them
Multi-sourcing	Three or more suppliers, common for commodity parts

The difference between single and sole matters: you can fix a single-source risk by qualifying another supplier, but a sole source needs a different plan. Our guide to single-source supplier risk covers both.

The trade-off

	Single sourcing	Dual sourcing
Price	Best volume pricing	Some volume discount lost
Cost to set up	One qualification	Two qualifications, and often two sets of tooling
Risk	One failure stops the line	A second supplier can take over
Management	One relationship	Two relationships to keep
Quality	One process to control	Two processes that must give the same part

How to decide, part by part

Score each part from 1 (low) to 3 (high) on four questions, and dual source the parts that score highest.

1. What does a stoppage cost? A part that stops your best-selling product scores 3. A part with a substitute on the shelf scores 1.
2. How long would a switch take? If qualifying a new supplier takes six months or more, a failure has nowhere to go: score 3.
3. How healthy is the supplier? Late deliveries, quality problems, financial strain or a single plant in a risky region raise the score.
4. Is there enough volume to split? If the volume is too small to keep two suppliers interested, dual sourcing may not hold. Look at other ways to protect the part.

Base the supplier health score on facts, not a feeling: a supplier scorecard gives you on-time delivery, quality and responsiveness for each supplier. For a structured review of the whole supplier base, see our supplier risk assessment.

If you dual source, make it real

• Give the second supplier real volume. A split such as 70/30 keeps its process running and its people familiar with the part.
• Qualify to the same specification. Two suppliers giving slightly different parts creates quality problems of its own.
• Agree how fast it can ramp up. Write down how much more the second supplier can take, and how quickly.
• Spread the geography. Two suppliers in the same region can be stopped by the same storm, port closure or tariff.
• Review the split once a year. Move volume toward the supplier that performs better.

Moving one of the two closer to home is a common choice: compare the options in reshoring vs nearshoring, and compare suppliers on landed cost, not unit price.

When single sourcing is the right call

• The part is easy to buy elsewhere. If a dozen distributors stock it, switching takes days, not months.
• The volume is small. Splitting it would cost more in price and paperwork than the risk it removes.
• You hold enough stock. Safety stock or a buffer agreement can cover the time it takes to switch.
• You are building a deep partnership with a supplier that is investing in your part.

Where this fits in your sourcing strategy

Dual sourcing is one tool in a wider supplier diversification strategy, which decides where to diversify, how and in what order. Start with the parts where a stoppage would cost the most, and work down. A purchased parts review is a good way to build the list.

Frequently asked questions

What is dual sourcing?

Buying the same part from two qualified suppliers, usually with most of the volume going to one and the rest to the other, so either can take over if the other fails.

Is dual sourcing more expensive?

Usually a little, through qualification costs, extra tooling and a smaller volume discount. Whether it is worth it depends on what a stoppage of that part would cost.

How should we split volume between two suppliers?

Many companies use 70/30 or 80/20. Give the second supplier enough business to stay interested and keep its process running, so it can ramp up quickly.