Single sourcing risk in the supply chain: Why companies must act now

Single sourcing was long considered an efficiency model: a well-established supplier, stable prices, and clear processes. Under stable conditions, this logic worked. However, geopolitical tensions, regulatory uncertainty, and maritime bottlenecks have systematically undermined it in recent years.

The resulting single-sourcing risk is increasingly becoming a structural problem for many companies: Supply chains with a high concentration on individual suppliers, locations, or transport routes are measurably more vulnerable to external shocks. For supply chain managers, this is no longer a theoretical warning – it is documented reality.

Why single sourcing is a real business risk today

• Tariffs and retaliatory tariffs alter procurement costs in the short term: Trade policy measures directly impact purchase prices, sourcing decisions, and margins. Customs and trade disputes are no longer a marginal issue, but a real cost factor in international procurement networks. Companies working with a single supplier in an affected region have no alternative.

• Taiwan remains a critical node in the semiconductor supply chain: Taiwan continues to play a central role in global high-tech and semiconductor supply chains. The dependence on individual semiconductor manufacturing locations is considered a systemic risk at the highest political level.

• Maritime bottlenecks remain systemically important: Logistical disruptions directly impact single-source networks. The Suez Canal reduces transport times by an average of more than ten days, and the Strait of Hormuz handles approximately 20% of global maritime oil trade.

• The war in Ukraine has empirically demonstrated the vulnerability of global supply chains: The war against Ukraine had worldwide repercussions for energy, raw materials, food, and logistics systems. Russia's large-scale aggression against Ukraine has heightened concerns that global value chains make economies susceptible to external shocks. The COVID-19 pandemic, at the very latest, has documented how strongly global value chains react to external disruptions. Disruptions in one country or region directly impact production and supply in other markets – this is not theory, but rather lived experience in companies.

The dilemma: More suppliers mean more complexity

Many companies have already reacted to these developments. Dual sourcing, regional procurement, and nearshoring are on the agenda in many places. However, the operational problem remains: more sources, more plants, more transport routes, and more restrictions make planning significantly more challenging.

Traditional planning systems often reach their limits in such networks. The core of the problem: Alternatives are desired from a technical perspective, but are not consistently modeled, evaluated, and applicable when needed.

For robust multi-sourcing, simply adding a second supplier to the ERP system is insufficient. The crucial factor is whether multiple suppliers are considered for critical raw materials, along with their own rules, quotas, restrictions, capacities, costs, and response options – this allows for the scaling up of alternative procurement channels in an emergency.

How SAP IBP makes multi-sourcing predictable

SAP IBP is designed to consolidate demand, procurement, inventory, production, and sales planning on a single platform – network-wide and across the entire supplier network. Four functions are particularly relevant for multi-sourcing strategies:

Transparency across the entire network: End-to-end transparency across suppliers, manufacturers, and business partners. Those who don't fully understand their dependencies cannot systematically protect them.

Mapping alternatives in the planning system: SAP IBP supports the modeling of sourcing rules and quotas. This allows alternative procurement paths to not only be documented but also considered in planning – with associated costs, capacities, and restrictions, not just as entries in a list.

Feasible supply plans instead of manual workarounds: The creation of a realistic procurement, production, and distribution plan that takes defined restrictions and business rules into account. This is the crucial difference to Excel-based contingency plans: The alternative supplier is stored in the system, evaluated, and ready to be activated.

Faster response to short-term disruptions: Order-based planning is explicitly designed for short-term changes and operational responsiveness. This is the crucial lever when suppliers, transport connections, or locations fail at short notice and need to be quickly replanned.

From risk identification to a robust supplier strategy

The strategic consequence is clear: It is not enough to know single-source dependencies. What is crucial is whether alternatives are stored in the planning system in such a way that they can be activated immediately in the event of a disruption.

A robust multi-sourcing strategy consists of three elements:

Step	What does that mean in concrete terms?
transparency	Systematically identify and prioritize critical single-source dependencies
Evaluate alternatives	Model real suppliers, locations, and routes with costs, capacities, and restrictions.
Planning activation	Define alternatives in the planning system with rules and quotas – don't just document them.

Only when all three elements are in place does a theoretical alternative option become an operationally usable Plan B.

Conclusion: Multi-sourcing is no longer an option – it is an operational necessity.

Single sourcing is not inherently wrong. But in a world with documented trade barriers, geopolitical conflicts, maritime bottlenecks, and concentrated technology supply chains, it is a measurable business risk.

Companies that not only recognize critical dependencies but also systematically implement alternatives are better able to react in the event of a disruption. This is precisely what multi-sourcing with SAP IBP is about: not theoretical redundancy, but predictable resilience.

Sources

• OECD (2025), OECD Supply Chain Resilience Review: Navigating Risks, OECD Publishing, Paris, https://doi.org/10.1787/94e3a8ea-en .

• Kamali, P. et al. (2024 March 7). Red Sea Attacks Disrupt Global Trade. IMF Blog. Retrieved from IMF: https://www.thebci.org/resource/bci-supply-chain-resilience-report-2024.html