Question

What sourcing category would the following items typically be classified in? Item A: high volume/value, low risk, multiple potential suppliers Item B: low volume/value, high risk, very few potential suppliers

Answer 1

Answer: Item A - Single Sourcing Strategy

Item B - Multiple Supplier Strategy

Explanation:

Item A:

This item is in high volume and has a low risk factor because there are multiple potential Suppliers present in the market. Because of this you can choose the SINGLE SOURCING STRATEGY because you can easily switch to others if one is unable to supply you with the good.

Item B:

This item has a low volume as the Suppliers are equally low. This means that the risk factor here is quite high. Because of these factors it is best to use a MULTIPLE SUPPLIER STRATEGY to mitigate the risk that one supplier will not have it. This was many options are available.

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