Insee Analyses · November 2025 · n° 114

Stockpiling or diversifying suppliers, what do firms do?

To guard against disruptions in the supply of raw materials or components, importers primarily rely on two strategies: diversifying their suppliers and building up buffer stocks. Practices vary widely from one firm to another: 10% of firms have more than five months’ worth of production in input stock, while another 10% have less than a week’s worth; one in four firms sources each product from only one country, whereas the 10% most diversified in terms of supplier countries use at least four.

These two strategies can substitute for each other: firms with the most suppliers generally maintain lower stocks, while those with fewer suppliers tend to stockpile more. This pattern is particularly pronounced by firm size, with larger firms favouring diversification and smaller ones relying more on stockpiling.

By managing their stocks, importers thus reduce the vulnerability of French industrial production to the uncertainties of global trade. For example, out of 3,175 imported inputs, 174 can be considered at risk: they are poorly diversified by the firms that import them and are difficult to diversify because global supply is concentrated in a small number of countries. Excluding from these 174 inputs those imported by firms holding at least one month’s worth of stocks reduces their number by more than half. The remaining 79 inputs, which are most at risk from short‑term shocks to international trade, represent only 0.2% of the total value of input imports. Nevertheless, shortages of these inputs may lead to high economic costs through cascading effects (as in the case of cobalt, which is essential for battery manufacturing) and other types of harm to the population (such as certain amino-alcohols critical to the pharmaceutical industry, whose unavailability can cause drug shortages).