MalakarConsultingMethod · Stage One
How we find it.
Every model below is published and citable. We show the formula, the thresholds and the source, so you can run it yourself or check ours. This is the diagnostic stage — what is exposed, and how badly.
Industry Playbooks
The same arc, run nine different ways.
Concentration maths is the constant — but what you point it at changes completely by sector. Pick an industry to see the exact diagnostic sequence we run there, the standard behind each step, and what it produces.
Supplier concentration — the Herfindahl–Hirschman Index
Concentration is the single best early predictor of whether a category can hurt you. The HHI is the measure U.S. antitrust regulators use on markets; the same arithmetic works on a supplier base, and it is far more honest than counting suppliers.
where si is supplier i’s share of category spend, expressed as a whole-number percentage. Four suppliers at 62 / 21 / 11 / 6 give 62² + 21² + 11² + 6² = 4,442.
Thresholds per the 2023 DOJ/FTC Merger Guidelines · index definition at the DOJ Antitrust Division. The 2023 guidelines lowered the “highly concentrated” line from 2,500 to 1,800.
Kraljic portfolio matrix — what each category deserves
Not every category is worth the same effort. Kraljic’s matrix sorts spend on two axes — profit impact and supply risk — and each quadrant implies a different strategy. It is the reason we do not negotiate a bolt the same way we negotiate a PCBA.
Kraljic, P. (1983). “Purchasing Must Become Supply Management.” Harvard Business Review, 61(5), 109–117. Still the most-cited framework in purchasing portfolio research.
Tariff and duty exposure, from public customs data
Before any NDA, a company’s import profile is largely public. We build the exposure picture from bill-of-lading and HS-code data, then apply the current duty stack.
where Vhs is annual import value under an HS code and Δrhs is the change in effective duty rate (Section 232/301 action, country switch, or exclusion expiry). Recovery paths — duty drawback, first-sale valuation, FTZ admission — are then netted against it.
Duty drawback under 19 CFR Part 190; foreign-trade zones under 19 CFR Part 146. Rate changes are tracked from the Federal Register feed on our Signals page.
ABC / Pareto — where to point the effort
Rank SKUs or suppliers by annual spend, take the cumulative share, and cut at 80% and 95%. Class A is typically 10–20% of line items carrying ~80% of spend. It is unglamorous and it decides where the other models get applied first.
Classical inventory classification, derived from Pareto’s distribution and formalised for inventory control by Dickie (1951) at General Electric.
Run it on your own numbers.
Every model on this page is one you can apply yourself. If you would rather we ran it, the first pass is free.