Glossary · Supply Chain
Supply Chain Concentration Metrics
Quantitative measures assessing dependency levels on specific suppliers, geographies, or transport routes to identify vulnerability from over-reliance.
Full definition
These metrics calculate the degree of supply chain diversification using indices such as Herfindahl-Hirschman Index, supplier share percentages, or geographic concentration ratios. High concentration indicates elevated risk from single points of failure, while excessive diversification may increase complexity costs. Organizations track concentration by spend, volume, criticality, and substitutability. An automotive manufacturer discovered 73% of semiconductor purchases came from two suppliers in one region, prompting a deliberate diversification strategy to reduce disruption vulnerability during chip shortages.
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