In the case of just one supplier, you need less time to manage the delivery. You will also be a more important client because you are asking for more. On the other hand, relying on a single vendor can be inherently risky.
Multi-sourcing became a trend for many years: companies enjoyed the competition between vendors and the flexibility. Sometimes, however, it may still be better to choose a single vendor.
Structuring incentives
A combination of variable rates tied to performance and fixed fees is sometimes not enough to produce perfectly aligned incentives. An article on the INSEAD business school website cites an example of a situation in which the same vendor is hired to manage a call centre and carry out redesign of a company website.
Payments are linked to the volume of phone calls (which drives revenues). The redesign also drives revenues but a performance metric is not easy to set since user experience is intangible. So clearly not all drivers of revenue are included in the structure of incentive.
In this case performance metric and revenue are not perfectly aligned (for the vendor) and it would be better to deploy two vendors, thus giving the company more levers of control. If the tasks can be separated (which in the example given is probably quite feasible), then you do just that and hire different vendors.
In this case, separate contracts for multiple vendors are recommended. The next article will look at what to do when tasks are integrated.
-jk-