5 tips that can help you neutralize sole source supplier woes

If turning back time was an option and COVID-19 could be erased from history, most business owners would likely take advantage of such an opportunity. But at the same time, the coronavirus provided a number of invaluable lessons that might never have been learned otherwise. For example, the pandemic demonstrated the importance of alternative sourcing and why diversifying suppliers can ensure continuity when disaster strikes.

However, if you're in a niche industry, sole source suppliers may be your only viable option. Thus, it's important to mitigate the risks that are endemic to having just one supplier (in total or for certain components) wherever you can. Here are a few tips that can help you do just that:

1. Be ever mindful of changing business conditions
One of the many reasons COVID-19 was as devastating as it was for the economy was due to the fact that no one saw it coming. Yet in hindsight — which is always 20/20 — there were some clues about the impact any airborne disease would have on supply chains. That's why it's important to pay attention to your business environment, advised Supply Chain Dive. From labor issues to logistical constraints to inventory shortages, being cognizant of production trends and how they're affecting your business can help you make the proper adjustments to reverse those trends.

Problem identification is central to supply chain management.

2. Identify the source of the issue
If the products you sell require multiple sole sources, then you may not know which sole source lies at the root of the problems you're experiencing. You can make the identification process easier by creating a database that keeps track of all your sole-source suppliers, Supply Chain Dive further recommended. Doing so will not only help you establish the extent of the problem you're experiencing, but whether it originates with a sole source or a single source supplier. If the latter is true, it may be worthwhile to seek out a new partner.

3. Incentivize performance by communicating your expectations
Mutual interest is the key to any business-sole source relationship. But when it comes to delivering on your high expectations, you may need to make productivity more of a priority for the supplier. If you can, find out what motivates your vendor. Discovering their goals and what inspires them to perform can inspire teamwork, planning and implementation of the strategies that ensure execution.

4. Move away from sole sourcing
Depending on your industry, it may be impossible to entire avoid sole sourcing, but if you're interested in selling or making new products for purchase, avoid those that are sole source dependent. Given the all or nothing nature of sole sourcing, the risks may outweigh the benefits.

5. Reconsider just-in-time inventory
As many manufacturers can attest, just-in-time inventory has been touted in recent years as a preferable — and more profitable — supply chain management option. But it proved to be a mistake in the wake of COVID-19, of which the global supply chain continues to feel the consequences. Shoring up your inventory — buying more than you need — can give you sufficient cover if your sole source supplier goes offline.