The Optimal Approach for Sole Source Outsourcing

Nearly all outsourcings start with some measure of supplier competition, even if only short lived. The customer typically has some amount of interaction with multiple prospective suppliers before settling on one. That is where the paths of outsourcing customers may diverge. Some customers follow a competitive bidding process, obtaining commitments to price and business terms from multiple suppliers. Other customers go to substantive discussions with just one supplier. There may be a number of reasons for proceeding with just one supplier. Sometimes it is because of another complementary or reciprocal relationship between the parties. In other cases it may be due to the need to engage the supplier in complex solution definition. Whatever the reason, a customer choosing the sole sourcing path must be careful not to underestimate the importance of following a disciplined process. The price of poor execution may not only be higher transaction cost and delay, but also the risk of a deal