Single Sourcing Your Packaging: The Hidden Risk

Single-sourcing may sound like a more viable option forproduct packaging. Building a good relationship with a top supplier and be reliant on them for all of your supply chain requirements seem to have many benefits, including effective trouble management and dispute resolution. It can undoubtedly build a solid foundation for your business.

This strategy can also be a bit risky sometimes.

Major events that have caused massive disruptions in global supply chains have been the US-China trade war and COVID-19 pandemic. These events have also affected the production and delivery of packaging supplies. Due to shutdowns and delays in the delivery of supplies, buyers have been looking for more consistent options. This impact has been severer for brands that were relying on single sources for packaging.

Your business is exposed to risk in two ways if you rely on single sourcing. The first and obvious one is that your supplier can go offline regardless of the reason. This situation can lead you requiring finding a new supplier. It can be a big challenge, especially when all other supply networks are not fully functional.

The second way can be a bit ambiguous. Relying on a single supplier may also make you reliant on undocumented and informal business procedures. Anything that results in that supplier going offline can result in your struggling to find alternatives for those informal business processes.

Setting up a new supplier can become significantly hard if your specs are not properly documented or openly available. It may be even impossible to shift to a new supplier if there is a lockdown situation out there.

These hidden risks can be dangerous as they can result in delays right when you need to make things happen quickly. Any delay in setting up a new supplier can also mean a significant interruption in your supply continuity.

Here are a few ways you can mitigate this risk.

Supply chain flexibility

The only way to avoid getting caught off guard is to build flexibility into your supply chain. This way, you can remove the risk of single sourcing. As a result, you can go for other options during a crisis.

The purpose of building flexibility is to make your supply chain portable. This way, you can switch to a more efficient supplier whenever needed. Here is what you may need to do to make all this happen.

• First and foremost, you will need to identify the categories of your products to see whether or not you are at risk. It will help you see if you are relying on one supplier for a critical component or service.
• Next, you will need to bring all of your stakeholders on a platform to make sure that information flow among all of you is accurate and efficient. You can consider using online collaboration tools instead of using emails or Excel files.
• You can create a central database for all of your approved and formal specifications. This way, all of the critical assets will be at your fingertips when you need them.

You can mitigate a lot of risks by bringing flexibility to the supply chain. The most essential part of this process is flawless communication between all business stakeholders.