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Are You Too Dependent On One Manufacturer?

Jan 24, 2024 | Manufacturing in China, Sourcing Agents

In business, we must be able to adapt, meet ongoing and ever-changing customer demands, and remain competitively priced.

Choosing who to partner with to support your business throughout these changes is critical, and sometimes, it’s easy to fall into the trap of staying with one manufacturer. We understand that working with one manufacturer does allow you to streamline operations and enhance efficiency.

However, dependence on a single manufacturer can pose significant risks and hinder business growth.

In this post, we explore some of the pros and cons of working with a single supplier compared to multiple suppliers and why building diversification into your strategy can be crucial for long-term success.

Why reliance on one manufacturer isn’t always a good thing

The main challenge of working with only one supplier is how it exposes you to the danger that, if the supplier experiences problems in their operations or their operations are disrupted in any way (i.e., economic downturns in the manufacturing region, geopolitical reasons, natural disasters, etc.), you will consequently be negatively affected.

Ultimately, this supply vulnerability means you won’t receive your supply of goods, affecting your ability to serve your customers. This can lead to even further problems as damage to reputation is often irreparable.

In addition, when working with a single manufacturer, how can you guarantee that goods are still sourced competitively? When was the last time you checked and compared prices? Or have you simply put all your eggs in one basket?

Due to no pricing comparisons, this leads to reduced competition, which reduces your bargaining power and increases the chance of quality deterioration.

Working with only one manufacturer also makes it harder to adapt to changing market conditions, as often your growth and their growth are intertwined. For example, what if you grow and your manufacturer can no longer manage your change in capacity? Now, you are more at risk of missing out on new technologies, ideas, and opportunities. Leading your competition to take over and your customers to make the switch.

Working with one manufacturer isn’t all bad…

Working with one person means building a strong relationship and mutual understanding. They begin to know your business inside and out and give you peace of mind that you will receive the same quality and service with every transaction.

Working with a single supplier also helps you streamline your procurement process, not overly complicate supply chains, and only have one line of communication.

Benefits of working with multiple suppliers

Diversifying your suppliers and manufacturers allows you to reduce the risk and impact of supply disruptions. If one supplier is experiencing problems, you have the option to move your supply to another without disruption affecting your customers.

Mitigating the risk of losing your competitive edge, you have access to high levels of expertise, technologies, and opportunities. Enabling you to grow your business and adapt to changing market conditions quickly and effectively. Improving products with competitive pricing and reducing the risk of losing intellectual property rights.

Multiple suppliers also allow you to meet fluctuations in demand, making supply chains and processes more flexible if you have a choice of suppliers, allowing you to adjust your order volumes easily.

You will also hold more negotiating power working with multiple manufacturers, allowing you to target the best prices, highest quality, and fastest delivery schedules.

However, working with multiple manufacturers does come with some challenges.

  • Supply chains can become complex and more costly to manage.
  • You will need to dedicate more time, money, and resources to managing communication, monitoring performance, and ensuring compliance.
  • There may be higher transaction costs for transportation, inventory, and quality control.
  • You may see a reduction in quality consistency and loyalty.
  • Product specifications may differ from supplier to supplier.
  • You can’t build long-term relationships.

Working with us, you can have the best of both worlds

Working with GHL Procurement allows you to work with one procurement team while we manage and work with numerous suppliers to offer you the best products at the most competitive prices, matched with further business opportunities.

We mitigate the risk to your customers as you can continue to supply goods and services without disruptions to the supply chain negatively affecting you.

What’s more, we leverage our bargaining power and pass these cost savings and opportunities on to you.

All of our suppliers are checked and vetted for quality assurance purposes so you can have peace of mind that you will receive consistently high-quality time and time again.

Offering you reduced dependency and risk, we can provide enhanced innovation and business opportunities as we implement effective processes, improve quality standards and response times, and tailor sustainable procurement solutions to meet your needs.

Working with multiple suppliers so you don’t have to.

We consider:

  • Manufacturing costs
  • Sourcing of raw materials
  • Taxes applicable
  • Sampling
  • Date and quality targets
  • Contract negotiations
  • QC checks and audits
  • Logistic options
  • And more.

Contact us today for all of your procurement needs and to work with a procurement team that can provide you with the competitive advantage you deserve.

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