Procurement Glossary
Network analysis: Systematic evaluation of supplier relationships
November 19, 2025
Network analysis is a strategic tool for the systematic analysis and evaluation of supplier relationships and their interdependencies in the procurement environment. It enables buyers to identify complex dependencies, assess risks and uncover optimization potential. Find out below what network analysis means, which methods are used and how you can use them to strategically manage your supplier base.
Key Facts
- Systematic analysis of supplier relationships and their interdependencies
- Identification of critical paths and single points of failure in the supply chain
- Visualization of complex network structures through graphical representations
- Support with strategic decisions on supplier diversification
- Basis for risk management and continuity planning in Procurement
Contents
Definition: Network analysis
Network analysis in Procurement systematically examines the structure and dynamics of supplier relationships and their interdependencies.
Basic concepts of network analysis
A network analysis records all relevant players in the supplier network and their relationships with each other. Various parameters such as delivery volumes, dependencies and communication channels are analyzed.
- Nodes: Suppliers, sub-suppliers and internal stakeholders
- Connections: Business relationships, information flows and dependencies
- Weightings: Volume, criticality and strategic importance
Network analysis vs. traditional supplier evaluation
In contrast to traditional supplier evaluation, network analysis not only looks at individual suppliers in isolation, but also at how they are embedded in the overall network. This enables a holistic view of risks and opportunities.
Importance of network analysis in Procurement
Modern procurement strategies require a deep understanding of complex supplier networks. Network analysis supports supplier management in identifying strategically important partners and optimizing the entire supply chain structure.
Methods and procedures
The systematic implementation of a network analysis requires structured methods and suitable analysis tools to record and evaluate complex supplier relationships.
Data acquisition and mapping
The first step involves the complete recording of all relevant network participants and their relationships. Both direct and indirect supplier relationships are documented.
- Identification of all Tier 1, Tier 2 and Tier 3 suppliers
- Recording of business volume and dependency ratios
- Documentation of communication channels and information flows
Structural analysis and visualization
Modern software tools enable the graphical representation of complex network structures. Supplier segmentation is supported visually and critical paths are identified.
Key figure-based valuation
Quantitative metrics such as centrality measures, cluster coefficients and path lengths enable an objective assessment of the network structure. These key figures are incorporated into the strategic risk analysis.
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Key figures for controlling the network analysis
Specific key figures enable the objective evaluation and continuous improvement of network analysis in procurement management.
Network structure key figures
Basic metrics describe the structural characteristics of the supplier network and enable comparisons between different network segments.
- Network density: Ratio of actual to possible connections
- Average path length between network nodes
- Cluster coefficient for measuring local networking
Risk and dependency ratios
These metrics identify critical dependencies and evaluate the robustness of the network against disruptions. They support strategic planning in supplier risk management.
Performance indicators
Key performance indicators measure the effectiveness of the network analysis itself and its contribution to optimizing the procurement strategy. These include analysis speed, forecasting accuracy and the number of identified optimization potentials per Quarterly Business Review.
Risks, dependencies and countermeasures
Network analysis poses specific challenges and risks that must be taken into account during implementation and application.
Data quality and completeness
Incomplete or incorrect data can lead to false conclusions. The quality of the network analysis depends largely on the accuracy of the underlying information.
- Regular validation of supplier data
- Implementation of data quality checks
- Continuous updating of network information
Complexity management
Very large networks can become confusing and overwhelm the analysis capability. Risk management must develop appropriate simplification strategies without losing important information.
Data protection and confidentiality
Analyzing supplier relationships can reveal sensitive business information. Data protection regulations and confidentiality agreements must be strictly adhered to in order to avoid legal risks and maintain the trust of the supplier base.
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Practical example
An automotive manufacturer carries out a comprehensive network analysis of its suppliers for critical electronic components. All direct and indirect suppliers up to the third tier are recorded and their dependencies visualized. The analysis reveals that 60% of the critical semiconductors come from just three Tier 2 suppliers, all located in the same geographical region.
- Identification of geographical risk concentration
- Development of a diversification strategy
- Development of alternative supplier relationships in other regions
Trends & developments in network analysis
Network analysis is constantly evolving and integrating new technologies to better capture and evaluate complex supplier relationships.
AI-supported network analysis
Artificial intelligence is revolutionizing network analysis through automated pattern recognition and prediction models. Machine learning algorithms identify hidden dependencies and predict network changes.
- Automatic detection of critical supplier paths
- Predictive analytics for risk assessments
- Intelligent recommendations for network optimizations
Real-Time Monitoring
Modern platforms enable the continuous monitoring of network changes in real time. Supplier risk management benefits from immediate notifications in the event of critical developments.
Integration into digital ecosystems
Network analysis is increasingly being integrated into comprehensive digital procurement platforms. This enables a seamless connection with other purchasing processes and improves the quality of decision-making in supplier lifecycle management.
Conclusion
Network analysis is an indispensable tool for modern procurement management that makes complex supplier relationships transparent and supports strategic decisions. It enables the early identification of risks and dependencies that would remain hidden if individual suppliers were viewed in isolation. By using modern technologies such as AI and real-time monitoring, network analysis becomes a dynamic management tool. Companies that use this method systematically can significantly strengthen their supply chain resilience and achieve competitive advantages.
FAQ
What is the difference between network analysis and supplier evaluation?
Network analysis looks at suppliers in the context of their relationships with each other and identifies systemic dependencies, while traditional supplier evaluation assesses individual suppliers in isolation. Network analysis enables a holistic view of risks and opportunities.
What data is required for a network analysis?
Information is required on all direct and indirect suppliers, their business relationships with each other, delivery volumes, geographical locations, degrees of dependency and communication channels. Data on sub-suppliers and their interrelationships is also required.
How often should a network analysis be carried out?
The frequency depends on the dynamics of the market and the criticality of the suppliers. For strategically important networks, a full annual analysis with continuous monitoring of critical key figures is recommended. More frequent analyses may be necessary for volatile markets.
Which software tools are suitable for network analysis?
Specialized network analysis software offers advanced visualization and analysis functions. Many modern procurement platforms already integrate network analysis modules. The selection should be based on network size, complexity and available resources.
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