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A procurement process must satisfy the following criteria:
1. fairness, integrity and transparency through competition
2 economy and effectiveness
3 best value for money.
When we go for single source buying, the above noted criteria ( specifically #1 which is most important and also support the the criteria #2 and3) will not be fulfilled. So, for high value and complex procurement, competitive procurement is the best option.
However, considering urgency, time constraints and simplicity, organizations may go for single source from trusted vendor for low value procurement upto certain limit as approved in the organizational manual.
I disagree to have sole supplier because this will lead manipulate you as a buyer, but if you obliged to have sole supplier because the material is sensitive and no enough supplier match with your requirements so you have to have a contract with strict conditions in order to guarantee supplying without any stoppage and you should put a formula for the pricing
One of the major objectives in Procurement to obtain best (offer) for your required material in addition to assure continuity of supply. Therefore, if Single Source can provide you such need , you are ok.provided you protect yourself by a strong and well constructed terms & conditions long term agreement.Also, alternate sources are easily available in the market if needed.
However, in real life, any thing could go wrong,hence it is better to allocate part of your requirement to a second source with same or reasonable difference in cost (say 80-20 or 70- 30) especially for strategic material .This will assure continuity of supply and competition.
It is beneficial because you can save time of soliciting quotes from other suppliers. However, single source is only applicable to restricted or sole distributor of a certain product/brand in your area.
Single source of supply from a reliable supplier vs competitive bidding process in procurement – the choice lies in nature of buyer-supplier relationship, industry, business dynamics. However, the same should be in accordance with company’s procedure, contractual obligations and national law. In most cases, competitive bidding process will ensure fairness, transparency, integrity and can be applied for a list of approved bidders , all of whom are reliable, compliant to quality, specifications and would have met the requirements of pre-qualification for the distinguished status of list of approved bidders/ suppliers
Single sources is only benefit if the material is unique, sole agent or distributor, in other case single sources will damage purchaser performance since he always believe supplier but supplier will manipulate the things and it will affects buyer reputation so should take care more always meanwhile have to calculate price comparision parellelly.
Single source buying from a trusted vendor is beneficial as compared to making efforts for Competitive Buying. Do you agree or not?
well, if you forced to have single vendor case because of nature of material or you dealing with sister company will be understood.
but, if you free to can get material from different suppliers of course you must develop other supplier to make sure you got best price, specification, ....
also risk management in case of soul vendor is very high, what is you alternatives?
I disagree , you should have several suppliers for the one item
In some part, yes. Many factors come into play. Keep the review processes transparent and honest and there shouldn't be issues. It can be beneficial to side with 'partners' in the way of forecasting, training, and financial.
