Which strategy involves a firm reducing its dependence on a single supplier?

Multi-sourcing is the strategy where a firm reduces its reliance on a single supplier by engaging multiple suppliers for the same category of goods or services. This approach mitigates risks associated with supply chain disruptions, as it not only enhances competition among suppliers but also allows the firm to secure better pricing and terms.

By engaging several suppliers, a company can avoid potential pitfalls that come from having only one source, such as quality issues, supply interruptions, or sudden price increases. Additionally, multi-sourcing provides flexibility in fulfillment, as firms can adjust their orders based on supplier performance, availability, or changing market conditions.

While single sourcing, vertical integration, and collaborative planning serve important roles in supply chain management, they do not specifically address the need to diversify supplier relationships to enhance reliability and security in supply. Single sourcing locks a firm into one supplier, vertical integration focuses on controlling the supply chain internally, and collaborative planning emphasizes strategic alignment and relationship management rather than supplier diversification.