One supplier is 40% of cost of sales. Nobody has spoken to a second.

Client concentration gets board attention. The supplier who accounts for half the cost base usually gets an annual price letter and a Christmas card.

By Steve 5 min read
Abstract bridge artwork for One supplier is 40% of cost of sales. Nobody has spoken to a second.

Most businesses can tell you, to the decimal, what share of revenue their largest customer represents. Far fewer can say what share of cost of sales sits with their largest supplier, and fewer still can say what would happen if that supplier stopped answering the phone on a Tuesday. The buy side of the ledger is where concentration hides, partly because it feels like a solved problem: the relationship works, the quality is fine, the invoices are predictable. Predictability is exactly what makes it invisible. Two different exposures wearing the…

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