Which factor might drive an organization to consider single sourcing?

The choice of a monopoly supplier as a factor driving an organization to consider single sourcing is driven by the reality that when a supplier is the sole provider of a product or service, an organization may have no alternative but to work exclusively with that supplier. This scenario often occurs in markets where a supplier has control over a unique resource, technology, or product that is critical to the organization’s operations.

In such cases, the organization might opt for a single sourcing strategy to ensure reliability in supply, as they cannot source these goods or services from any competitor. While single sourcing can introduce risks, such as dependence on one supplier, it may also facilitate closer collaboration, better pricing negotiations, and tailored solutions, particularly when there's no viable alternative due to the monopoly situation.

Other factors listed, such as sufficient supplier competition or a preference for diverse sourcing options, typically encourage organizations to adopt multiple sourcing strategies, as these promote resilience and reduce risks associated with supply chain disruptions. High volatility in order quantity generally prompts organizations to seek flexibility, again supporting the move towards multiple suppliers to better manage fluctuations in demand.