What does the term 'single source' imply in supply chain management?

The term 'single source' in supply chain management refers to an arrangement where a company relies on one supplier for a specific product or service. This approach indicates that the organization has chosen a sole supplier to provide a particular item, which can streamline processes and potentially foster a closer relationship between the buyer and the supplier.

This reliance can lead to advantages such as better pricing due to volume commitments, guaranteed availability of parts, and simpler logistics. However, it can also present risks, such as supply chain disruptions if that sole supplier encounters issues. Overall, the concept emphasizes exclusivity in sourcing, highlighting the relationship dependence between the purchasing entity and the supplier.