Sole versus Multiple Sourcing Strategies in Supply Chain Management

Sourcing is the set of business processes required to purchase goods and services in supply chain (SC). A successful supply chain management needs an effective sourcing strategy to combat uncertainties in both supply and demand. In particular, supply distribution results in excessive downtime of production resource, upstream and downstream supply chain repercussions, and eventually a loss in the market value of the firm. Decision making on Number of suppliers is a strategic issue in sourcing process that is studied from several aspects. Some strategies such as Just In Time (JIT) philosophy concentrate on reducing number of suppliers and long term contracts. On the other hand, pooling lead-time risk by simultaneously splitting replenishment orders among multiple suppliers is a sourcing policy that has attracted the attention of practitioners and academic researchers.In this paper, after reviewing the relevant literature of order splitting we have focused on qualitative and quantitative effects of this policy on effectiveness and costs of supply chains. Finally important limitations of current studies that could be improved by future researchers and some new management applications are suggested.

Keywords:

Supply chain management. , Sourcing strategies , Order splitting , Lead time. , Transportation