G-P06 · TOPIC · supplier-concentrationGCRI dossier · service level R0
GCRITrade and Strategic ResourcesIn development
Topic dossier · Trade and Strategic Resources

Supplier concentration

An economy or firm that depends on one or two suppliers for an essential input is exposed to any shock those suppliers face. Concentration can be at the level of countries, firms or facilities, and it is often hidden several tiers up a supply chain. This page sets out how concentration arises, how it is measured from trade and firm data, and what evidence serves the governments and firms working to diversify.

01In brief

The short answer.

Supplier concentration is dependence on a small number of countries, firms or facilities for an essential input. It grows from efficient sourcing choices, often hides several tiers up a supply chain, and matters most when the input is hard to substitute. Trade data, input-output tables and firm surveys measure it.

02Geography

Activity and hazards in the Strait of Malacca.

For supplier concentration, in GCRI's spatial-intelligence reading, the map opens on night lights, population density and true-colour imagery with true colour from NASA GIBS, framed on the Strait of Malacca; every other NASA layer, live feed and forecast waits in the layer list.

The interactive map needs JavaScript; the layer list and sources are below.

Layers 3

Activity and hazards, for this page

Latest available

NASA GIBS / EOSDIS · ASTER GDEM (METI, NASA) · Blue Marble (NASA) · © OpenStreetMap contributors (ODbL) · Natural Earth

Loading the latest NASA imagery.

Drag to move. Ctrl or ⌘ and scroll, pinch or the buttons to zoom; hover for the values under the pointer; reset returns to the region.

For supplier concentration, in GCRI's spatial-intelligence reading, the map opens on night lights, population density and true-colour imagery with true colour from NASA GIBS, framed on the Strait of Malacca; every other NASA layer, live feed and forecast waits in the layer list.Satellite and model products as NASA publishes them, each with its own date; indicators, not assessments of any place; claim ceiling INTEGRATED.

Data: NASA GIBS · ASTER GDEM · Blue Marble · © OpenStreetMap contributors · Natural Earth · GDACS · Copernicus Sentinel-2 L2A · NASA HLS S30Sources and licences

  • We acknowledge the use of imagery provided by services from NASA's Global Imagery Browse Services (GIBS), part of NASA's Earth Science Data and Information System (ESDIS). Colours redrawn from the published colour map; values averaged into H3 cells where shown (modified). NASA open data
  • We acknowledge the use of imagery provided by services from NASA's Global Imagery Browse Services (GIBS), part of NASA's Earth Science Data and Information System (ESDIS). Colours redrawn from the published colour map; values averaged into H3 cells where shown (modified). NASA open data
  • VIIRS Black Marble night-time lights, NASA Goddard Space Flight Center; distributed by the NASA Level-1 and Atmosphere Archive and Distribution System (LAADS DAAC); imagery via NASA GIBS. Colours redrawn from the published colour map; values averaged into H3 cells where shown (modified). NASA open data
  • Center for International Earth Science Information Network (CIESIN), Columbia University. 2018. Gridded Population of the World, Version 4 (GPWv4): Population Density, Revision 11. NASA Socioeconomic Data and Applications Center (SEDAC). Licensed under CC BY 4.0. Colours redrawn from the published colour map; values averaged into H3 cells where shown (modified). CC BY 4.0
  • VIIRS near-real-time products (flood, land surface temperature, snow cover, corrected reflectance), NASA LANCE; imagery via NASA GIBS. Colours redrawn from the published colour map; values averaged into H3 cells where shown (modified). NASA open data
  • MODIS land products (vegetation indices, gross primary production, land cover), NASA LP DAAC and LANCE; imagery via NASA GIBS. Colours redrawn from the published colour map; values averaged into H3 cells where shown (modified). NASA open data
  • NASA Fire Information for Resource Management System (FIRMS), VIIRS 375 m active fire product, NASA LANCE; vector tiles via NASA GIBS. Colours redrawn from the published colour map; values averaged into H3 cells where shown (modified). NASA open data
  • ASTER GDEM is a product of METI and NASA (ASTER Global Digital Elevation Model V003, NASA LP DAAC); imagery via NASA GIBS. Colours redrawn from the published colour map; values averaged into H3 cells where shown (modified). NASA open data
  • Made with Natural Earth. Free vector and raster map data @ naturalearthdata.com. Public domain
  • © OpenStreetMap contributors (ODbL), via NASA GIBS (coastlines, boundaries, roads and place names). Colours redrawn from the published colour map; values averaged into H3 cells where shown (modified). ODbL
  • Blue Marble, NASA Earth Observatory; imagery via NASA GIBS. Colours redrawn from the published colour map; values averaged into H3 cells where shown (modified). NASA open data
  • Context on the globe and flat map: coastlines, boundaries, roads and place names from NASA GIBS reference layers (OpenStreetMap data, ODbL, © OpenStreetMap contributors); Blue Marble imagery as an optional base; 3D terrain and the elevation read-out from the ASTER GDEM elevation colour index (5 m to 200 m classes, exaggerated for legibility). Boundaries are drawn as published and imply no position on any territory.
  • Globe: MapLibre GL JS 6.9.1, BSD-3-Clause, © MapLibre contributors.
  • Live: GDACS (EC JRC / UN OCHA) Events are indicative, not official warnings.
  • Observed (EO): Copernicus Sentinel-2 L2A (contains modified Copernicus Sentinel data 2026), Microsoft Planetary Computer
  • Observed (EO): NASA HLS S30 (contains modified Copernicus Sentinel data 2026). We acknowledge the use of imagery provided by services from NASA's Global Imagery Browse Services (GIBS), part of NASA's Earth Science Data and Information System (ESDIS).
  • Optional layers (35 sources in the layer list: live, forecast, observed and context) print their provider credit on the map and here when switched on; forecasts are model output and derived indices are estimates.

Layers and dates

  • Night-time lights, daily: VIIRS Black Marble (VNP46A2), NASA LAADS DAAC · 12 Oct 2026
  • Population density, 2020: Population: CIESIN, Columbia University, Gridded Population of the World v4.11 (2018), NASA SEDAC, CC BY 4.0 · static
  • True colour: VIIRS NOAA-20 corrected reflectance, NASA LANCE · 13 Oct 2026
  • Land cover type (IGBP), yearly: MODIS Terra and Aqua land cover (MCD12Q1), NASA LP DAAC · 2024
  • Flood water, 3-day composite: VIIRS Global Flood Product, NASA LANCE · 14 Oct 2026
  • Active fires and thermal anomalies, last day: VIIRS NOAA-20 375 m (FIRMS), NASA LANCE FIRMS · 13 Oct 2026

03Console

Supplier tier map, in outline.

The working screen behind this subject: its structure, terms and states. Names are placeholders and values illustrative.

Supplier tier map

Supplier concentration · Assembly cluster · Bill of materials BOM-089

Single source at tier 3GCRI · Trade and Strategic Resources

Tier mapping

  1. Tier 118 suppliers
  2. Tier 264
  3. Tier 3163
  4. Raw materials9

Concentration

Rare earth magnet765617None qualifiedHigh
Gallium776123Recycling pilotHigh
Copper wire251066Two qualifiedLow
Lithium cells572908One qualifiedMedium

Mitigation

Dual source
qualification 13 months
Buffer stock
8 weeks
Design change
substitution study
Owner
Procurement lead
Supplier tier map: the screen's structure, terms and states for Supplier concentration.Placeholder names and illustrative values; a design, not a record or a live system.
04The question

Supplier concentration: how the risk develops.

Single points of failure in production. The dossier below sets out how the risk develops, what is measured, where the data come from, how it is modelled and who decides.

Mechanism

Efficiency favours concentration

Scale economies, specialised know-how and low prices draw demand to the most efficient suppliers. Concentration grows from individually rational sourcing choices.

Mechanism

Dependence hides in deeper tiers

A buyer may have many direct suppliers who all depend on the same subcomponent maker. Firms often lack visibility beyond their first tier.

Mechanism

Few substitutes raise exposure

Concentration matters most when an input cannot be replaced quickly by another product or supplier, because of qualification, certification or technical lock-in.

Mechanism

Shocks propagate along dependence

When a concentrated supplier stops, buyers across industries and countries are hit at once, and competition for remaining supply raises prices.

05Key terms

Terms used on this page.

Each term as this page uses it. Where a standard-setting body defines the term, the wording follows that body.

TermDefinition
Herfindahl-Hirschman indexA concentration measure equal to the sum of squared supplier shares.
Tier-two supplierA firm that supplies a firm's direct supplier, one step further up the chain.
SubstitutabilityHow easily an input can be replaced by another product or source.
06Indicators

What is measured, and how well.

Each indicator carries its unit, its cadence, the kind of source behind it and the evidence label a value would carry. No values are shown: a programme supplies them under its own authority.

IndicatorUnitCadenceSource typeLabel
Import concentration by productHerfindahl-Hirschman index of supplier countriesannualBilateral trade dataESTIMATED
Products with a dominant suppliercount of products with one supplier above a stated shareannualTrade data analysisESTIMATED
Upstream dependence through value chainsshare of foreign value added by sourceper releaseInter-country input-output tablesESTIMATED
Firms with mapped tier-two supplierspercent of surveyed firmsper surveyBusiness surveysREPORTED
Substitutability of inputelasticity or qualitative classper assessmentEngineering and economic studiesESTIMATED
Strategic stocks helddays of consumptionper assessmentGovernment and firm recordsDECLARED
07Canvas

From sources to decisions.

The topic as a computational graph: named sources feed the methods, an evidence review gates the outputs, and the decisions stay with the authorities that hold them.

Pipeline canvas · Supplier concentration as a run graphDesign, not a record
Supplier concentration: supply chain disruption analysisThe bill of materials is mapped through its tiers; concentration and chokepoints are found; disruption scenarios compare time to recover with time to survive; mitigations close the gap. Design of the process, not a record of a run.

Fig. 02Nodes carry their type, two metric rows and a state; connectors show what feeds what; dashed frames name the owners; the timeline is the cadence. Design of the pipeline, not a record of a run.

08Sources

Where the evidence comes from.

Named public datasets and institutional records, each with its licence class. Sources by agreement are used only under their terms and never republished.

SourceWhat it givesLicence class
BACI international trade database (CEPII)Harmonised bilateral trade flows at product levelOpen, Etalab open licence
OECD Trade in Value Added (TiVA) and ICIO tablesValue added and dependencies along global value chainsPublic, OECD terms
UN ComtradeBilateral trade by productFree access with limits, UN terms
European Commission strategic dependencies analysesMethods and results for identifying dependenciesPublic, EU reuse policy
Business supply chain surveysFirm visibility and diversification practiceLicence per survey
09Decisions

Who decides, and what the evidence serves.

Trade and Strategic Resources prepares evidence. The decisions below are taken by the authorities named, under their own rules, and never by the platform.

Who decidesThe questionEvidence this page serves
Ministries of economy and industryWhich dependencies are strategic and how to reduce themDependency screens; substitutability evidence
Procurement leads in critical sectorsWhich inputs to dual-source or stockpileConcentration and stock evidence
Trade agenciesWhich partnerships could diversify supplyDiversification option studies

Outputs this topic produces

  • Product-level dependency screens from trade data
  • Value chain dependency analyses using input-output tables
  • Diversification option studies
  • Methods notes on measuring concentration
10Core questions

What experts ask about concentration.

  • How concentrated is supply at each stage of production, not only at the final stage?
  • Are apparently diverse suppliers in fact dependent on a common upstream source?
  • How substitutable is the input, and how long does qualifying a new supplier take?
  • What buffers, such as inventory or spare capacity, exist downstream?
  • How does concentration change over time with consolidation and policy?
11Mechanisms and drivers

Why concentration creates hidden risk.

Economies of scale, specialised know-how and network effects push many industries towards concentration. A few suppliers can serve the market at lower cost than many small ones. The risk lies in the tails: a fire, flood, cyber incident, insolvency or policy decision at one supplier can affect a whole industry.

Concentration is often hidden. A manufacturer may buy from several suppliers who all depend on the same upstream producer of a chemical, wafer or part. Network science describes this as a common-cause failure, and it is invisible without mapping beyond the first tier.

Concentration interacts with lean practices. Low inventories and just-in-time delivery reduce cost but leave little time to find alternatives when a key supplier fails.

12Methods and data

Methods and their limits.

  1. 01

    Concentration indices

    Measures such as market-share indices by product and country. They depend on product definitions and may miss ownership links.

  2. 02

    Multi-tier mapping

    Tracing suppliers of suppliers. Firms often do not know or will not share their deeper tiers.

  3. 03

    Network centrality

    Identifying nodes whose removal fragments the network, using network science.

  4. 04

    Optimisation of buffers

    Modelling the trade-off between inventory cost and disruption risk with operations research.

Public data mostly show concentration by country, not by firm or site, so the real degree of concentration is often understated.

13Methods

How it is studied, and what the methods cannot say.

14Questions

Questions and answers.

What is the Herfindahl-Hirschman index?
A measure of concentration calculated by summing the squared market shares of all suppliers. Higher values mean more concentrated supply.
Why are deeper tiers important?
Because many direct suppliers may share the same upstream source, so dependence that looks diversified at the first tier can be concentrated further up.
Is concentration always bad?
No. It can lower costs and improve quality. It becomes a risk when inputs are essential, hard to substitute and the supplier faces correlated shocks.
Is concentration always a problem?
No. It can be efficient. The question is whether the risk of a single failure is understood and buffered.
Does the platform name concentrated suppliers?
It analyses structures using public data and does not publish confidential firm-level information or rankings.
Why look beyond the first tier?
Because diverse direct suppliers may share a single upstream source, which only deeper mapping reveals.
Trade and Strategic Resources

Bring your expertise to this field.

The current service level is R0: information and enquiries. An enquiry receives a reference and names the next step; applications, payments, compute allocations and registrations open only when their team, terms and review capacity exist.