I have never been a proponent of single sourcing. I also don't believe in having an endless number of suppliers for every product.
Yet what I've always strongly recommended is having a primary and a strong secondary vendor, because as seen particularly in the last year with the economic downturn, that as a buyer, you can be left swinging in the wind if you only have one supplier and that supplier goes belly up. Your business could be compromised to the point of bankruptcy.
The powers that be have always argued with me on this point. "Oh...we can get better pricing by consolidating volume! We win -- our supplier will do anything to keep the business." Well that's a nice naive thought that doesn't take into account the fact that firstly there is an a limit to volume pricing....for every 1000 let's say you add, you don't get a tremendously better deal, because there is a limit to the profit that a supplier can give up. Secondarily, you may actually get better pricing by ensuring that you continue to have some competition going on by keeping at least two suppliers
in the game. And thirdly? One that the government of Canada is now seeing -- there is a tremendous risk relying on just one supplier.
In the paper today it says that Ottawa is "rethinking" their sole source to GlaxoSmithKline for the swine flu vaccine. No kidding! The inability to supply the vaccine after the federal, provincial and local governments have created a panic of "if you don't get the vaccine you will die" is almost criminal. But what is worse is the fact that bureaucrats who don't understand the implications of lack of supply and who inherently put their misguided trust into one supplier are those that gave in to the "powers that be" whom I argued with often in my career.
As I said in my previous blog....the lack of supply and quite honestly the logistics surrounding getting people vaccinated should have been put into the hands of a competent supply
chain professional. By the time now that the vaccine will be available..the flu season will be mostly spent...I for one am not getting the vaccine, because I also have never bought into the Chicken Littles out there...and I used to work for a vaccine manufacturer!
Yet what I've always strongly recommended is having a primary and a strong secondary vendor, because as seen particularly in the last year with the economic downturn, that as a buyer, you can be left swinging in the wind if you only have one supplier and that supplier goes belly up. Your business could be compromised to the point of bankruptcy.
The powers that be have always argued with me on this point. "Oh...we can get better pricing by consolidating volume! We win -- our supplier will do anything to keep the business." Well that's a nice naive thought that doesn't take into account the fact that firstly there is an a limit to volume pricing....for every 1000 let's say you add, you don't get a tremendously better deal, because there is a limit to the profit that a supplier can give up. Secondarily, you may actually get better pricing by ensuring that you continue to have some competition going on by keeping at least two suppliers
in the game. And thirdly? One that the government of Canada is now seeing -- there is a tremendous risk relying on just one supplier.In the paper today it says that Ottawa is "rethinking" their sole source to GlaxoSmithKline for the swine flu vaccine. No kidding! The inability to supply the vaccine after the federal, provincial and local governments have created a panic of "if you don't get the vaccine you will die" is almost criminal. But what is worse is the fact that bureaucrats who don't understand the implications of lack of supply and who inherently put their misguided trust into one supplier are those that gave in to the "powers that be" whom I argued with often in my career.
As I said in my previous blog....the lack of supply and quite honestly the logistics surrounding getting people vaccinated should have been put into the hands of a competent supply
chain professional. By the time now that the vaccine will be available..the flu season will be mostly spent...I for one am not getting the vaccine, because I also have never bought into the Chicken Littles out there...and I used to work for a vaccine manufacturer!
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