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# Single-Source Dependency

## Definition

A supply chain condition in which a buyer relies on one supplier for a
critical component or material with no readily substitutable alternative.
Single-source situations arise from supplier specialisation, geographic
concentration of competent producers, or deliberate buyer policy
maximising scale economies with a preferred partner. During disruptions,
a single-sourced supplier in a critical category temporarily possesses
monopoly-like pricing power, as the buyer has no alternative and demand
is inelastic in the short run.

## Source

Market Structure in Modern Supply Chains, §Market Concentration and
Single-Source Dependencies

## Supply Chain Domain

Risk

## VSM Assignment

S4 — Single-source dependency is an intelligence failure at the S4 level:
the supply chain's environmental scanning has not identified and mitigated
the concentration risk. Resolving it requires S4 action — supplier
development, geographic diversification, or technology substitution.

## WoN Concept

Monopoly in Trade — Smith argues that monopolists charge the highest price
buyers will bear, and that this price is always above the competitive level.
A single-source supplier during a supply disruption is a temporary
monopolist: buyers cannot immediately switch, demand is inelastic, and the
supplier can extract above-normal prices. Smith's analysis of how monopoly
restricts supply and raises price applies directly to the disrupted
single-source scenario, even though in normal conditions the same supplier
may operate competitively.
