Posted in Operations and Supply Chain Terms, Total Reads: 1266
Definition: Split Sourcing
Split sourcing is a strategic type of sourcing in which one tries to split the contract between two or more parties. This helps to reduce its dependence on sole supplier and thereby increase competition among its suppliers. Split sourcing is sometime also referred to as dual sourcing.
Eg: Company ABC has specialized production of anti-aircraft gun and due to this they are charging their customer heavily. When second player enters similar segment company ABC’s advantage reduces. Now defense ministry would split its order with both the players. This forces ABC to lower its price to remain competitive.