Spend Concentration by Supplier
Category: Analytical
Measures the proportion of total procurement spend that is concentrated with individual suppliers.
What it Measures ?
How much of spend is focused on top suppliers.
Relevant StakeHolders
Strategic Sourcing, Procurement Heads
Why it Matters ?
Analyzes spend to improve supplier prioritization.
In-depth Use Case / Real-world Example
A company producing industrial valves tracks Spend Concentration by Supplier to understand how much of its total spend is allocated to each supplier. For example, if the company spends ₹100 crores in total, and ₹50 crores is spent with a single supplier, the Spend Concentration is 50%. High concentration may indicate over-reliance on a single supplier, which can increase risk. Monitoring this helps the company diversify suppliers to mitigate potential supply chain disruptions.
Sample Formula
Spend by Top Suppliers / Total Spend