Single-Source Supply - The Advantages And Disadvantages
Choosing to buy all or a large percentage of your supplies from a single source may feel like putting all your eggs in one basket, but it also brings many advantages that help you run your business more efficiently.
Let’s take a look at both the advantages and the disadvantages of single-source supply, to help you decide whether or not a single-source packaging supplier is a great fit for your organisation:
The benefits of single-source purchasing
Reduced administration tasks
Shopping around here and there might seem like a good way to whittle a few pence off the cost of goods, but the savings made by your purchasing team will be lost in the accounts department. Scrappy little petty cash receipts to be sorted, piles of supplier invoices to be entered and paid separately, multiple discount arrangements to be checked against…
Contrast that nightmarish scene with one where you receive a single monthly invoice. Imagine if that one supplier could also integrate their system with yours, giving you accurate reports that contain data in a familiar format!
More efficient use of space
How much are you paying to store supplies before using or selling them? Do you ever wish you had more space?
A single-source supplier with centralised storage of all your requirements will save you the cost of storage and free up your space for more productive use.
Streamlined goods-in operations
Scheduling deliveries to multiple locations or a busy goods-in department can be a headache that’s only worsened if you have to simultaneously liaise with the despatch departments of several suppliers and their carriers.
Using a single-source supplier like Westmount means you have a single point of contact who has full visibility of all despatch and carrier activity, reducing or eliminating the bottlenecks at your loading bay with single deliveries.
Brand consistency in every detail
The quality of your products, the reliability of your supply chain from your suppliers and to your customers and the stability of your prices are all essential to the strength of your brand.
As a single-source supplier, Westmount can also hold bespoke products and products with longer lead times in stock for you.
Whether you are buying products to use or resell, you need to know that the quality will remain constant, the prices competitive and the service reliable. If you are operating from more than one location, you need to be certain that each of them is receiving the same product quality at the same price and service level.
As your single-source partner, Westmount can give you the assurance that your company is operating consistently wherever it is located.
Hear firsthand experience from one of our clients...
Lower transport costs
If you are despatching products from multiple suppliers, these will need to be brought to your location for the order to be assembled, packed or palletised, then shipped out again. With transport costs now crippling trade, this is an unwanted blow to your bottom line.
Let us do the work for you, assembling, packing and shipping complete orders directly from our centralised warehouse.
Reach your zero carbon footprint goals quicker
A single source supplier automatically reduces your carbon footprint. With all your goods coming from a centralised warehouse, you are helping the planet by negating the multiple logistical dynamics of a multi-source supply.
Cost control and savings
Single sourcing your supplies can also save you significant amounts of money. We’ve already mentioned the time-saving effects of reduced admin and operations (which are also cash savers) and reduced transport costs, but you can also save on cost of goods.
For a start, single-source suppliers are more willing to offer discounted prices to customers who buy everything from them, because they in turn can operate more efficiently if average order values are higher. If you’re running your business from multiple sites, you are also more likely to get discounts for bulk quantities if you buy from a single-source, rather than leaving each location to buy separately.
An arrangement with your single-source supplier can also ensure that spending across multiple sites is kept controlled and within budget.
Actionable data
Businesses succeed on accurate, relevant and timely data, not on gut feel and guesswork, but compiling all that data from different supplier sources can be tedious, time-consuming and prone to inaccuracies.
A single-source supplier who can provide you with regular reports on expenditure, purchasing and stock levels will help you set and stay within budgets, forecast stock demand and supply and identify opportunities for further efficiencies.
The disadvantages of single-source purchasing
We’re not saying that this is the best solution for every business; we know it isn’t and you may have valid reasons for preferring to buy from multiple suppliers. Like any business model, single-source purchasing can also have disadvantages.
Dependency
There is the classic problem of putting all your eggs in one basket. If your single-source supplier faces financial, production, or operational difficulties this could have a potentially disastrous effect on your ability to operate efficiently. Establishing new supplier agreements and supply chains at short notice can cost time and money.
Brand identity
If you are tied to the brand of a single-source supplier, your fortunes are more likely to rise and fall with those of the supplier’s brand. For example, if their brand is seen to be acting unethically, declining in quality or popularity, this will have an impact on your business.
Interruption
Buying from a single-source can also put you at risk of supply interruption. Peak demand or unexpected events can quickly create bottlenecks that you may not be able to overcome as easily as if you had multiple suppliers.
Competition
If a supplier knows they are your single-source for their products, there’s a risk they might exploit the situation. Competition between suppliers is a good incentive for them to constantly strive to provide the best possible service and costs. Having multiple suppliers can also give you more bargaining power to strike a better deal.
Product Choice
It would be unusual for a single supplier to offer the perfect product range, both in terms of scope and quality. Having multiple suppliers means you can select the most suitable products from each manufacturer’s range to create a unique selection that best suits your needs and those of your customers.
Single-source purchasing – is it for you?
We hope we’ve stimulated your interest in the potential that single-source purchasing may offer your business.
If you think this might be good for your business, it’s important to do your homework before you take the plunge. Some examples you may want to consider:
How financially sound is your single-source supplier?
Do they have the capacity to support and grow with you?
Are there any conflicts of interest that might pose a threat to your business?
At Westmount, we have grown by putting long-term, trusted relationships with our customers ahead of short-term commercial gain.
We know that our success depends on being a perfect fit for your business and delivering on our promises.
If you would like a no-obligation discussion about how a single-source purchasing agreement with Westmount might work for you, please give us a
call.