Multi-sourcing for resilience and cost-savings

Authors:
Emma KEBAILI, Alwyn Johnson
MIT Supply Chain Management Program (SCM)

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Summary:
Our sponsor, a global FMCG manufacturer currently sources most of their materials from a single supplier, but wants to transition to a multi-sourced supply base to improve their resilience. To maximise the resilience of their supply base, we’ve developed a “hedging score” that assesses potential suppliers based on the degree of “hedge” they provide compared to the existing supplier, and an algorithm that does this at scale. To also deliver cost savings from a new multi-sources supply base, we’re also helping them explore dynamic sourcing methods so that they have a scalable method of allocating volume to the lowest cost supplier.


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