Dual Sourcing: The Strategy
Dual sourcing means procuring the same component or material from two suppliers rather than one. The goal isn't to complicate purchasing, but to secure the supply: if one supplier fails — a shortage, a price increase, a quality issue, a geographic disruption — the other steps in. Dual sourcing is insurance against dependence on a single point of failure.
What dual sourcing delivers
The strategy offers three main benefits. It reduces the risk of shortage if a supplier fails. It rebalances commercial leverage, by avoiding total dependence on a single partner. And it provides a continuous basis for comparison on price, quality, and service. In exchange, it requires qualifying and monitoring two suppliers, and it splits volumes — meaning sometimes a smaller scale effect.
So dual sourcing isn't a universal recipe, but a trade-off. The real question isn't "one supplier or two?" in the abstract, but "on which items is the cost of a second supplier justified by the risk avoided?" For a critical component with no quick alternative, the extra cost of security pays for itself easily. For a commodity item available everywhere, it adds nothing. Done well, the approach means splitting SKUs between those that require the security of two sources and those that a single, properly managed supplier serves very well.
When to adopt dual sourcing in an SME
Dual sourcing is mainly justified for critical items: those whose shortage would stop production or delivery. For these SKUs, the security is worth its cost. For ordinary items easily found elsewhere, a single, well-managed supplier can be enough. Deciding where to double up and where not to belongs to the "decision" layer of the Two-Layer Model: it's a risk trade-off, made upstream, that purchasing execution then applies consistently.
The common mistake
The most frequent mistake is believing that having two suppliers on file is enough. If the second one has never actually produced for you, isn't qualified, or can't ramp up volume quickly, dual sourcing is only an illusion of security. A second supplier only protects if it's actively maintained — regular orders, verified quality, confirmed capacity. The other trap is doubling up the entire catalog out of caution, which spreads effort thin and raises costs without targeting the real risk.
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Frequently asked questions
What is dual sourcing?
It's procuring the same item from two suppliers rather than one, in order to secure the supply.
What are the advantages of dual sourcing?
It reduces the risk of shortage, rebalances commercial leverage, and provides a continuous basis for comparison on price, quality, and service.
Should every supplier be doubled up?
No. Dual sourcing is mainly justified for critical items whose shortage would stop production or delivery, not for the entire catalog.