2-20.3 Single Sourcing

Single sourcing is the selection of a strategic source from a number of possible sources to fulfill all Postal Service requirements for a particular class of goods or services. Single sourcing should be considered when there is a strategic or key supplier among the pool of potential suppliers. Single sourcing is not the same as sole sourcing, which occurs when there is genuinely only one supplier that can meet the requirement. Single sourcing may be justified for business objectives like:

• Obtaining priority service from the supplier in times of shortage.
• Ensuring just-in-time manufacturing, which may require a single source for quality, control, and coordination.
• Maintaining lower total cost on high volume.
• Reducing total system inventory, freight cost, and costs associated with special tooling.
• Obtaining more clout with one supplier.
• Meeting time-to-market window.
• Responding to emergency situations whereby response time is critical.
• Rewarding supplier’s superior performance.
• Achieving overall best value for the Postal Service.

As it did when the preliminary sourcing strategy was developed, the purchase/SCM team must consider whether the single source strategy may potentially negatively impact the Postal Service’s commitment to establish and maintain a strong competitive supplier base by putting small, minority, and women-owned businesses at a competitive disadvantage, and whether, among other things, the single source strategy is justified in light of these considerations. .In these instances, it will be important for the purchase/SCM team to gather and analyze the pertinent data that supports the single sourcing approach. The proper analysis and data to support and build a business justification for a single source strategy can be obtained through:

• Spend analysis.
• Market research.
• The extent of competition.