Bringing in a new supplier can be a challenge for any organization. However, adopting a dual sourcing strategy could make the process a lot more efficient and effective.
What is a dual sourcing strategy?
When going out to market for a particular category, you may encounter a supplier who is more competitive than your current partner. While making the switch to the new supplier makes financial sense, your current supplier is so ingrained in your organization that it would be difficult to transition the business outright.
A dual sourcing strategy allows you to reap the financial benefits of transitioning without the inherent risk of disruption.
To illustrate how it works, consider this real-life scenario: You are thinking about getting a new car. The one you currently have isn’t bad, but there are definitely some opportunities for improvement. For example, your current car has over 100,000 miles, gets poor fuel economy, and is not exactly one of the best looking cars on the road.
You hit the dealerships to check out new cars, paying specific attention to models that are cost effective, get great mileage and offers longevity. Eventually, after analyzing the top cars in the market, you decide on the model for you.
However, your family isn't quite sold. They love your old car, and they are hesitant about the new one for a variety of reasons - they don't have any real-life experience with the brand. like the technology, they're uncomfortable behind the wheel, and they don't really quite trust the brand.
Ultimately, you decide to purchase the new car and make it your primary source of transportation, because you feel it is the best option for you and your family. However, you will also keep your old car as a secondary vehicle to be used during transition until your family is fully on-board with the new car and all it offers.
This two-car scenario is a simplified example of dual sourcing strategy. Just like how your family wasn’t completely ready for only one car and wanted to keep the previous car, sometimes an organization is not ready for a sole source strategy. The idea then is to introduce a new supplier, one that offers competitive pricing, quality and service, and that will yield improved efficiencies and reduced costs in your organization. This new company will be the primary supplier for your organization, but you will still maintain a relationship with your legacy supplier as a secondary option.
How can you make a dual sourcing strategy a success?
In a dual sourcing scenario, communication and implementation meetings are crucial. Just think about how your family would react when they got a new car. They would want to know when, or in what cases they use that car. Why is it better? How do they use it? Similarly, your end-users will want to know: In what cases should I use the primary supplier as opposed to the secondary supplier? Why is the new supplier better? How do I place an order with them? What if the new primary supplier doesn’t have the product I am looking to purchase, or an aspect or program offering from the secondary supplier is better?
Each person in the organization needs to accept the dual sourcing strategy and understand the benefits it will bring to not only their part of the organization, but the organization as a whole. Keeping all members of the organization involved in the assessment process through contracting, award, and implementation will help make sure all parties are aligned.
It's imperative to make sure that all stakeholders feel like they have a voice in the process. They must also be confident in the fact that, although a new primary supplier is coming in, there is still a secondary “known” supplier who they are comfortable with and who will remain available to them during the transition period.
To further ensure adoption, you should help the new primary supplier set up implementation meetings with each member of the organization. This allows the members to get to know the new supplier, gain familiarity with their offerings, and understand why they are the best option in the market.
By implementing a dual sourcing strategy and following these tips, your organization can gain a new, trusted supplier while ensuring a smooth transition from your old supplier.