In the context of sourcing strategies, what term describes purchasing from a single supplier?

• A. Single Source
• B. Multi Source
• C. Insourcing
• D. Outsourcing

Answer: (A)

This question tests understanding of sourcing patterns, specifically when a company buys from just one supplier. Purchasing from a single supplier is called single sourcing (a single source arrangement). It streamlines coordination and can unlock better terms and closer collaboration because there’s only one point of contact and interface. However, it also concentrates risk: if that supplier encounters problems, the buyer may face supply disruption.

In contrast, multi sourcing uses several suppliers, which spreads risk but increases management complexity. Insourcing brings the activity in-house, while outsourcing involves contracting external providers; the latter can involve one or more suppliers, but doesn’t by itself describe the number of suppliers. So the term that best describes purchasing from a single supplier is single source.