The Procurement Glossary » Sole Sourcing
Sole Sourcing
Sourcing & RFx
Definition
A situation where only one supplier can provide the required good or service, leaving the buyer no competitive alternative.
Explanation
Sole sourcing arises from patents, unique capability or specification lock-in. It weakens the buyer's leverage and raises risk, so procurement seeks to design it out where possible, or manages it with long-term agreements and value tracking.
Example
A proprietary spare part is sole-sourced from the OEM, so the buyer negotiates a multi-year price cap instead.
Related terms
- Single Sourcing — Choosing to buy an item from one supplier even though alternatives exist, usually to gain volume leverage or a deeper partnership.
- Supply Risk — The risk that supply of a good or service is disrupted, constrained or made more costly.
- Vendor Lock-In — A situation where switching away from a supplier is difficult or costly, reducing the buyer's leverage and choice.
- Negotiation — The discussion between buyer and supplier to agree price, terms and conditions before a contract or order is placed.
Frequently Asked Questions
What is Sole Sourcing?
A situation where only one supplier can provide the required good or service, leaving the buyer no competitive alternative. Sole sourcing arises from patents, unique capability or specification lock-in. It weakens the buyer's leverage and raises risk, so procurement seeks to design it out where possible, or manages it with long-term agreements and value tracking.
Can you give an example of Sole Sourcing?
A proprietary spare part is sole-sourced from the OEM, so the buyer negotiates a multi-year price cap instead.
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