Dual Sourcing in Supply Chain Design: A Multi-Dimensional Framework of Risk

Sourcing decisions are a key factor in supply chain security. In this research the authors posit that there are multiple risk types involved in the sourcing decision, and develop a model framework for analyzing these risk components. Specifically, increasing the number of sources minimizes risk related to supply disruptions, but intensifies risk related to security failures. This paper, which is a part of an ongoing research effort that develops a supply chain approach for international logistics, concludes that the best structure for single or dual sourcing from a risk minimization perspective depends on whether the suppliers operate in series or in parallel, and if in parallel, as a backup or as an alternative with a prescribed percentage.