Highlands assessment
Two contracts can share one failure point
Yes. Two suppliers can both depend on the same producing region, processor, or transport route. A second contract only reduces the exposure under review if the alternative can continue supplying when the first pathway is disrupted.
The useful question is where the supply chains separate, and whether that separation protects the input your operation needs.
An illustrative manufacturing scenario
The following example is hypothetical. It demonstrates the method and does not describe a client or a current market event.
A manufacturer buys the same component from two domestic suppliers. Both source a critical subcomponent from one overseas processor. The manufacturer has commercial alternatives, but a disruption at that processor could affect both.
Supplier diversification may still help with other problems, such as a failure at one distributor. It does not resolve the shared processing dependency in this example.
Trace what must remain available
- Identify the shared dependency. Establish the processor and relevant origins with the suppliers. Treat unknown links as information gaps.
- Define the business consequence. Determine which products need the component, how much usable inventory exists, and what interruption the operation could absorb.
- Test the alternative. Confirm whether another source uses a different processor and meets the required specification. A listed vendor is not necessarily a usable replacement.
Build the indicator and decision link
| Element | Question or entry |
|---|---|
| Dependency | One overseas processor supplies both approved vendors. |
| Potential disruption | An interruption prevents the processor from fulfilling orders. |
| Observable indicator | Confirmed changes to production or shipment commitments, assessed with supplier reporting. |
| Decision point | Expected replacement time would exceed usable inventory coverage. |
| Options to evaluate | Qualify a source with a different processor, adjust inventory, or accept the exposure with an agreed contingency. |
The threshold needs to be defined from actual operating data. Generic 30-, 60-, or 90-day triggers would add precision without establishing whether the business can act in time.
What makes the playbook useful
A warning indicator needs a plausible connection to the dependency. A decision point needs enough lead time for a feasible option. The playbook must explain both connections and make clear who will assess a change.
This is where open-source analysis and operating knowledge meet. External reporting may reveal a change around the processor or its location; the business and its suppliers establish how that change could reach the component.
Scope note: this is an original illustrative method example. It makes no factual assertion about a named supplier and requires no external event to be occurring. Real engagements need evidence for the dependency, the disruption mechanism, and the operating thresholds.
Apply the question to your business
A Geopolitical Exposure Review relates these questions to your critical inputs, sourcing options, and operating constraints.
Explore the Exposure Review