In international business, it’s common to encounter sole sourcing and single sourcing. Many people think the two are the same thing, but in reality, they have distinct differences. In today’s post, we will delve into the 2 sourcing modes from the following 5 key aspects.
Explore single sourcing via examples
Single sourcing refers to purchasing products or services from one supplier, without considering alternative options. For example, many small e-commerce sellers and startups wholesale several kinds of products, each type with a small MOQ, from a trading company or sourcing agent.
When it comes to big companies, single sourcing also applies. For chain supermarkets, usually purchasing thousands of product categories, it is almost impossible for them to contact each factory and purchase every product by themselves. They entrust the trading company or sourcing agent to complete the time-consuming and tedious procurement task.
Understand sole sourcing in procurement
Sole sourcing means the practice of procuring goods or services from a single supplier, as there are no other suppliers in the region providing the product or service you need.
For instance, Oculus, known as Apple in the VR Era, establishes a sole source contract with Goertek for VR device procurement in China. Goertek is the only mainland Chinese manufacturer actively involved in the international VR supply chain. It possesses strong overall design capabilities, particularly in key components such as optical lenses and acoustic components, equivalent to the “Foxconn” of the VR industry.
On the other hand, Goertek’s supply chain is well-established: if one million screws are needed, the factory is just a block away; if a slight modification to the screws is required, it can be accomplished in several hours. This is also what initially attracted Oculus. Oculus just needs to provide the definition and performance requirements for VR products. And the rest is handled by the exclusive ODM supplier Goertek.
Another common sole sourcing example is the branded product purchased solely from the brand or authorized distributors, which are the only legitimate source.
Sole sourcing vs single sourcing: what's the difference?
Both terms refer to sourcing from a single supplier. But they are different in terms of the availability of choice.
In sole sourcing, buyers have no choice but to use a specific supplier who often holds a monopoly in the industry. For example, Samsung‘s dominance in the manufacturing of smartphone screens accounts for over 90% of the global market. iPhones also utilize Samsung screens. Consequently, the supplier wields significant control over pricing, delivery schedules, frequency, and other contractual terms.
With single sourcing, although you primarily depend on one supplier, you still retain the flexibility to explore alternative options if needed.
If the supplier has recently shown poor performance such as delayed deliveries, quality issues, or price hikes, you can consider other suppliers as backup choices. Through market research, supplier evaluation, and negotiation, you establish a partnership with a new supplier to compensate for the shortcomings of the current supplier and mitigate business risks.
Which suits your import business better? (pros and cons)
The choice depends on your specific situation and the products you are purchasing.
If you purchase branded products or your desired product, including core components, is monopolized, you can only choose sole sourcing. Supposing you tend to use Qualcomm chips for your mobile phone business, you can only buy from Qualcomm distributors.
Advantages and disadvantages of sole sourcing
The biggest benefits of sole sourcing lie in:
- Streamline supply chain management as you only need to work with one supplier.
- Ensure consistent product quality and adherence to specified standards, as suppliers are typically industry leaders.
About the disadvantages, you have less leverage in negotiating terms, pricing, and contractual agreements. Becuase the supplier is the only one in the region to offer your desired products or services. He has more control in setting the terms and conditions that align with their interests rather than yours.
In practice, single sourcing is more suitable when you have the need to wholesale or customize one product, or when you want to wholesale multiple types of products with small MOQ and can find them all from a single supplier.
Benefits and risks of single sourcing
The major 3 benefits lie in:
- Compare prices quoted by different suppliers and then get the best-matched supplier.
- Negotiate competitive prices and get favorable payment terms when purchasing in bulk.
- Just deal with one supplier, saving time and effort.
However, there are also increased risks when relying on one supplier in the supply chain. If product issues arise or the supplier fails to deliver promptly or even the supplier encounters financial difficulties, significant losses can occur, even if you have the initiative to consider and use alternative suppliers.
It is important to carefully evaluate the potential risks and benefits before implementing a single sourcing strategy and consider alternative sourcing options to reduce related drawbacks.
Jingsourcing makes it easy to source from China.
JingSourcing, a leading sourcing company in China, has assisted over 4000 clients in sourcing a wide range of products from China. Either single sourcing or sole sourcing or any other sourcing type, we are here to support you and smooth your China sourcing journey.
We handle the entire sourcing process, from finding suppliers to delivering products.
Before approaching us, many buyers find suppliers on Alibaba and other B2B platforms. But they often find it is too hard to get a good one and easy to get scammed.
One of our core values is to help buyers find reliable suppliers. First, we have our supplier database across a wide range of products, all of whom have undergone our factory audit and cooperated with us many times. With our suppliers, scam-free assurance is guaranteed.
If the product you are looking for is unique and not available in our supplier database, we will go to the industry cluster of that product and conduct on-site factory checks. And based on our agents’ expertise in the product and industry, we can negotiate with factories to obtain favorable product prices and MOQ for you. Then, make and send samples for your confirmation. Once you approve the sample after modifications, we will follow up on the production process to ensure timely delivery and product quality.
Before arranging the shipment, we will inspect the products based on your checking focus. Both AQL sampling and 1-by-1 inspections are available.
Each step involved in the China sourcing process is done efficiently, and we will keep you informed along the way.
We excel in custom product sourcing, saving you time and money.
Compared to purchasing ready-made products, customized product projects better demonstrate your partner’s professionalism. This is built on long-term engagement in product customization. Since founded in 2015, 90% of our clients have engaged in product customization, showcasing our extensive experience in this field.
Last year a physical store retailer in the USA found us to help him customize a special-shaped glass candy jar in a size range of 25-30cm. Actually, before approaching us, he had spent a lot of time searching for suppliers on Alibaba. After much effort, he managed to screen out some suppliers looking good but found the given quotes too high.
Knowing the client’s suppliers’ names, we found all of them were trading companies that cooperate with glass bottle factories in Xuzhou. Here the factories use the 6S equipment and specialize in producing small glass bottles. Of course, their price would be high. Such large-size cups should be bought directly from Shandong glass bottle factories that use 8S machines.
We directly approached our cooperative glass bottle factory in Shandong and helped the client get a good quote, as low as half the price in the Xuzhou glass factories.
Last but not least, we have a dedicated design team to support custom packaging and provide repackaging services. With a 4,000-square-meter warehouse plus full-time staff, we have helped many clients to do packaging, including highly customized packaging for smaller orders, sourcing accessories for bundled products, and conducting comprehensive product inspections. Most other suppliers can’t do that.
Many other value-added services such as product photography for e-Commerce and Amazon FBA pre-services are also available. In short, we have the ability to make your China sourcing easier, safer, and cheaper.
