42 lines
1.7 KiB
Markdown
42 lines
1.7 KiB
Markdown
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<!-- generated: provider=openrouter model=arcee-ai/trinity-large-preview:free date=2026-02-22 source=market-structure -->
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# Single-Source Dependency
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## Definition
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A supply chain condition in which a buyer relies on one supplier for a
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critical component or material with no readily substitutable alternative.
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Single-source situations arise from supplier specialisation, geographic
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concentration of competent producers, or deliberate buyer policy
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maximising scale economies with a preferred partner. During disruptions,
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a single-sourced supplier in a critical category temporarily possesses
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monopoly-like pricing power, as the buyer has no alternative and demand
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is inelastic in the short run.
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## Source
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Market Structure in Modern Supply Chains, §Market Concentration and
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Single-Source Dependencies
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## Supply Chain Domain
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Risk
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## VSM Assignment
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S4 — Single-source dependency is an intelligence failure at the S4 level:
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the supply chain's environmental scanning has not identified and mitigated
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the concentration risk. Resolving it requires S4 action — supplier
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development, geographic diversification, or technology substitution.
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## WoN Concept
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Monopoly in Trade — Smith argues that monopolists charge the highest price
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buyers will bear, and that this price is always above the competitive level.
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A single-source supplier during a supply disruption is a temporary
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monopolist: buyers cannot immediately switch, demand is inelastic, and the
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supplier can extract above-normal prices. Smith's analysis of how monopoly
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restricts supply and raises price applies directly to the disrupted
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single-source scenario, even though in normal conditions the same supplier
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may operate competitively.
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