The Global Centre for Risk and Innovation (GCRI)
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.
GCRI · In development · service level R0
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.
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.
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NASA GIBS / EOSDIS · ASTER GDEM (METI, NASA) · Blue Marble (NASA) · © OpenStreetMap contributors (ODbL) · Natural Earth
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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.
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The working screen behind this subject: its structure, terms and states. Names are placeholders and values illustrative.
Supplier concentration · Assembly cluster · Bill of materials BOM-089
| Rare earth magnet | 76 | 5617 | None qualified | High |
| Gallium | 77 | 6123 | Recycling pilot | High |
| Copper wire | 25 | 1066 | Two qualified | Low |
| Lithium cells | 57 | 2908 | One qualified | Medium |
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.
Scale economies, specialised know-how and low prices draw demand to the most efficient suppliers. Concentration grows from individually rational sourcing choices.
A buyer may have many direct suppliers who all depend on the same subcomponent maker. Firms often lack visibility beyond their first tier.
Concentration matters most when an input cannot be replaced quickly by another product or supplier, because of qualification, certification or technical lock-in.
When a concentrated supplier stops, buyers across industries and countries are hit at once, and competition for remaining supply raises prices.
Each term as this page uses it. Where a standard-setting body defines the term, the wording follows that body.
| Term | Definition |
|---|---|
| Herfindahl-Hirschman index | A concentration measure equal to the sum of squared supplier shares. |
| Tier-two supplier | A firm that supplies a firm's direct supplier, one step further up the chain. |
| Substitutability | How easily an input can be replaced by another product or source. |
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.
| Indicator | Unit | Cadence | Source type | Label |
|---|---|---|---|---|
| Import concentration by product | Herfindahl-Hirschman index of supplier countries | annual | Bilateral trade data | ESTIMATED |
| Products with a dominant supplier | count of products with one supplier above a stated share | annual | Trade data analysis | ESTIMATED |
| Upstream dependence through value chains | share of foreign value added by source | per release | Inter-country input-output tables | ESTIMATED |
| Firms with mapped tier-two suppliers | percent of surveyed firms | per survey | Business surveys | REPORTED |
| Substitutability of input | elasticity or qualitative class | per assessment | Engineering and economic studies | ESTIMATED |
| Strategic stocks held | days of consumption | per assessment | Government and firm records | DECLARED |
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.
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.
Named public datasets and institutional records, each with its licence class. Sources by agreement are used only under their terms and never republished.
| Source | What it gives | Licence class |
|---|---|---|
| BACI international trade database (CEPII) | Harmonised bilateral trade flows at product level | Open, Etalab open licence |
| OECD Trade in Value Added (TiVA) and ICIO tables | Value added and dependencies along global value chains | Public, OECD terms |
| UN Comtrade | Bilateral trade by product | Free access with limits, UN terms |
| European Commission strategic dependencies analyses | Methods and results for identifying dependencies | Public, EU reuse policy |
| Business supply chain surveys | Firm visibility and diversification practice | Licence per survey |
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 decides | The question | Evidence this page serves |
|---|---|---|
| Ministries of economy and industry | Which dependencies are strategic and how to reduce them | Dependency screens; substitutability evidence |
| Procurement leads in critical sectors | Which inputs to dual-source or stockpile | Concentration and stock evidence |
| Trade agencies | Which partnerships could diversify supply | Diversification option studies |
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.
Measures such as market-share indices by product and country. They depend on product definitions and may miss ownership links.
Tracing suppliers of suppliers. Firms often do not know or will not share their deeper tiers.
Identifying nodes whose removal fragments the network, using network science.
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.
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.