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Supplier Concentration Risk Calculator

Work out supplier concentration risk instantly with clear inputs, formula shown and shareable results.

About Supplier Concentration Risk Calculator

Concentration ratios CR1 and CR5 measure how much spend sits with the largest and the top five suppliers. High concentration delivers leverage but creates a single point of failure, while a very low average spend per tail supplier signals a consolidation opportunity rather than a risk.

Formulas

Concentration ratio

CR1 % = Largest supplier spend / Total spend x 100

Top five share

CR5 % = Top five spend / Total spend x 100

Average tail spend

Average tail = Total spend x (100% - CR5) / (Suppliers - 5)

Worked example

With the default values below, Supplier Concentration Risk Calculator returns Largest supplier share of spend of 26.47%. Change any input above and every figure here is recalculated in your browser.

Inputs used

Largest supplier spend
180,000,000
Top five supplier spend
420,000,000
Total category spend
680,000,000
Number of suppliers in the category
42

Results

Largest supplier share of spend
26.47%
Top five supplier share
61.76%
Average spend per tail supplier
$7,027,027.03
Assessment
Moderate concentration

Step by step

  1. 1Values used
  2. 2Concentration ratio
  3. 3Top five share
  4. 4Average tail spend
  5. 5Largest supplier share of spend= 26.47
  6. 6Top five supplier share= 61.76
  7. 7Average spend per tail supplier= 7,027,027.03
  8. 8Assessment= Moderate concentration

Assumptions and limits

  • The result is derived only from the 4 inputs listed above. Anything not among them is not part of the calculation.
  • In particular, this calculator does not take inflation, tax, fees or charges or compounding frequency into account.
  • Figures are rounded for display to 2 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.

How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.

Frequently Asked Questions

Is high concentration bad?

Not necessarily. It buys volume leverage and reduces management cost, but it demands business continuity planning and a credible alternative source.

What about the tail?

A long tail with tiny average spend is a cost problem rather than a risk problem, and is usually the best consolidation opportunity.

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