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Concentration of Risk
12 Months Ended
Mar. 29, 2020
Concentration of Risk  
Concentration of Risk

Note 18. Concentration of Risk

 

Sales to customers and purchases from suppliers are largely governed by individual sales or purchase orders, so there is no guarantee of future business. In some cases, the Company has more formal agreements with significant customers or suppliers, but they are largely administrative in nature and are terminable by either party upon several months or otherwise short notice and they typically contain no obligation to make purchases from TESSCO. In the event a significant customer decides to make its purchases from another source, experiences a significant change in demand internally or from its own customer base, becomes financially unstable, or is acquired by another company, the Company’s ability to generate revenues from these customers may be significantly affected, resulting in an adverse effect on its financial position and results of operations.

 

The Company is dependent on third-party equipment manufacturers, distributors and dealers for all of its supply of wireless communications equipment. For fiscal years 2020, 2019, and 2018, sales of products purchased from the Company's top ten suppliers accounted for 50%,  48%, and 43% of total revenues, respectively. Products purchased from the Company’s largest commercial supplier accounted for approximately 23%,  16%, and 11% of total revenues in fiscal years 2020, 2019, and 2018, respectively. Products purchased from the Company’s largest retail supplier accounted for approximately 7%,  8%, and 10% of total revenues in fiscal years 2020, 2019, and 2018, respectively. The Company is dependent on the ability of its suppliers to provide products on a timely basis and on favorable pricing terms. The Company believes that alternative sources of supply are available for many of the product types it carries, but not for all products offered by the Company. The loss of certain principal suppliers, including the suppliers referenced above, or of other suppliers whose products may be difficult to source on comparable terms elsewhere, would have a material adverse effect on the Company.

 

As noted, the Company's future results could also be negatively impacted by the loss of certain customers, and/or supplier relationships. For fiscal years 2020, 2019, and 2018, sales of products to the Company's top ten customer relationships accounted for 31%,  32%, and 28% of total revenues, respectively. There was one customer that accounted for 11% of total revenues in fiscal year 2020. No customer accounted for more than 10% of total revenues in fiscal year 2019 and 2018.