Limited supplier options definitely put a business in a tough spot because there is only so much negotiating power when everyone is buying from the same source.
I would probably focus on the areas I can control: comparing total costs between suppliers, buying ahead when pricing is favorable, and keeping enough margin in my pricing to absorb increases without taking a loss. I would also keep relationships with the smaller suppliers even if they are resellers. Sometimes service, availability, or flexibility can still make them worth having as a backup.
I also agree that customers may need to understand that certain material costs are simply part of what it takes to provide the service properly.
