Mitigating Supply Chain Risk with a Dual Sourcing Strategy

For all the negative news about global supply chain disruptions it’s good to know that there’s at least one positive when it comes to future trends in supply chain management, and it’s this:
Dual sourcing is on trend to become the next big thing in B2B manufacturing.

That’s not to say, of course, that dual sourcing (also known as multi-sourcing) is a one-size-fits-all panacea to challenges facing global supply chains.

To be honest, it’s not—and it never will be.

What dual sourcing is, however, is a smart alternative. Whether sourcing suppliers in Mexico or sourcing them globally in India, China, Vietnam, or elsewhere, to create a more resilient supply chain it’s essential to source the right commodities at the right time from the right suppliers.

SCM and Risk Mitigation

“There’s a reason we don’t dual source 100% of the time,” explains Bhavin Shah, Associate Director, Sourcing at MES. “In some cases, the volumes simply don’t make sense. In other cases, the project is simple enough that the risks can be more easily managed. Dual sourcing is a fantastic strategy, except when there’s no realized benefit within the supply chain from an efficiency standpoint.”

But, for those with rigid supply chains, such as the lighting, aerospace, and automotive industries, dual sourcing is often the very best way to manage risk and build supply chain resiliency.

“For these industries, one small hiccup with a single supplier can literally shut down an assembly line,” says Bhavin. “Even among other industries, putting all the proverbial eggs in one supplier basket can quickly spell disaster if the supplier is bought out or, worse, goes under. So, when critical projects are on the line, dual sourcing is more often than not the better option.”

With a successful dual sourcing strategy in place, it’s much more efficient and cost-effective to pivot in order to meet ever-changing demand.

Benefits of Dual Sourcing

At MES, we employ a dual sourcing strategy only when it truly benefits our customers. For us, that’s about 20% of the time. For these customers, our dual sourcing strategy results in:

Shorter lead times and nearshoring options
Delivery on large-capacity projects
Cost advantages afforded by overseas suppliers

“Although dual sourcing as a procurement strategy has greatly expanded since the pandemic, we’ve been dual sourcing for over a decade now,” says Bhavin. “We’ve created and refined our dual sourcing strategy so that we can react more quickly to volume fluctuation and mitigate capacity risk. Because we evaluate our dual sourcing strategies every quarter by measuring impact to cost, our customer know that they receive the best sourcing services based on performance, costing, and efficiency.”

Dual Sourcing Done Right

Like any strategy, dual sourcing has its pros and cons. So, let’s get real about the potential drawbacks of sourcing multiple suppliers and, more importantly, how to manage them.

One of the biggest obstacles to dual sourcing is quality. Everything from the quality of manufactured parts and components to the packaging from two or more suppliers—regardless of where each supplier is located—must be equal and in accordance with engineering specifications and customer expectations.

That’s why we have a worldwide team that includes strong in-country and domestic sourcing professionals.

“We have boots-on-the-ground associates in China, India, Vietnam, and Mexico,” explains Bhavin. “Which means they’ve developed close and meaningful business relationships with suppliers all around the world. By virtue of their position and proximity, our in-country teams have a clear understanding of customer expectations along with physical evidence of what a quality part is supposed to look like. As a result, we have seamless, transparent, and often face-to-face communication with our suppliers. Plus, we deliver the highest quality parts and components, whether from one, two, or more suppliers.”

These long-standing supplier relationships across the globe mean we’re able to avoid the time and hassle that can befall those who are new or less experienced in dual sourcing.

“There’s no need for us to start fresh and build a foundation of support,” says Bhavin. “We’ve already done that, so our supplier relationships are deep and far-reaching, which allows us to move quickly whenever a second or even third or fourth supplier is needed.”

The MES Advantage

When it comes to best-in-class supply chain solutions—including working with multiple suppliers—MES is ready to help you build a more resilient supply chain, too.

Here’s how:

Customer Service: MES takes care of its customers. Our industry-leading staff, proven processes, and sourcing strategies enable us to meet customer requirements for cost and quality.
Global Reach: Our suppliers, warehouses, and manufacturing facilities are located all around the globe, from Mexico to Vietnam, and from China to India and beyond, enabling us to deliver quicker tooling, faster orders, and lower-cost solutions.
Strategic Sourcing: MES has a highly qualified and robust in-house sourcing team that combines in-depth research with data analytics to onboard the best global suppliers—suppliers who support our promise to deliver accurate, defect-free products.

Curious about dual sourcing and want to find out if it’s right for you?