One supplier is 60% of cost of sales. The relationship runs on purchase orders.

Concentrated supply is not automatically a problem. What matters is whether the concentration was chosen, and what the arrangement looks like on a bad day.

By Steve 5 min read
Abstract bridge artwork for One supplier is 60% of cost of sales. The relationship runs on purchase orders.

A single supplier accounting for the majority of cost of sales is common in distribution, manufacturing, construction and specialist services. It is often the result of good commercial sense: volume earns better pricing, familiarity reduces error rates, and one relationship is cheaper to run than four. The difficulty is that the arrangement is frequently governed by nothing more than a rolling sequence of purchase orders, each one perfectly adequate on its own and collectively silent on every question that matters when something goes wrong. The useful distinction is not between…

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Important: General information only. Rialto Bridge articles describe patterns and considerations that may apply to a business; they are not financial, legal, tax or accounting advice, and they take no account of your particular circumstances. Consider your own situation and seek advice from a qualified professional before acting.

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