The consequence is higher cost in many forms. Table 26.2 lists examples of unintended consequences from blindly going with the lowest bidder. The examples show how both buying and selling companies might be affected.
The principal effect on the buying company added administration for every dollar purchased. This is incurred in the belief that it reduces the cost of material itself. On the other side, the selling company will hesitate to make the commitments needed for long-term market success. We don't think that “sole source” is the right path for every material requirement. But companies should have some method to make the trade-offs necessary to find the right mix.