What is multiple sourcing?

• A. Using several suppliers to reduce risk.
• B. Using a single supplier to simplify coordination.
• C. Outsourcing production to a foreign country.
• D. Sourcing only from the closest supplier.

Answer: (A)

Multiple sourcing means using several suppliers for the same materials or components instead of relying on just one. This approach reduces risk by avoiding dependence on a single source: if one supplier has a delay, quality issue, or capacity constraint, others can fill the gap, helping to keep production on track and prevent stockouts. It also encourages competition among suppliers, which can improve service levels and potentially lower costs over time. The trade-offs include more complex supplier management and higher coordination costs, but the payoff is greater resilience. The other options describe relying on one supplier to simplify coordination, offshoring production, or choosing suppliers based only on proximity, none of which achieves the same risk reduction through diversification.