Tier 2 Supplier Overview
Tier 2 suppliers are your suppliers’ suppliers, or companies that subcontract to your direct suppliers. Organizing suppliers into tiers based on their importance and relation to your supply chain is called supplier tiering. Most buying companies don’t know who their suppliers’ suppliers are. Visibility into tiers 2 and 3 is challenging.
There are 3 proven strategies to get visibility on all your suppliers:
- Mapping your Tier 1 suppliers and segmenting them by their business criticality.
- Traceability enables truly understanding what your end products are made of by tracking the origin of products and materials throughout the supply chain.
- Establishing formal and informal communication and governance at all levels builds stakeholder trust.
Visibility becomes cloudier deeper into the tiers. It is impossible to manually track all that data. Data collection and analysis should be automated. Software like riskmethods and Supplier.io makes it easier to map tier 2 and 3 suppliers and track performance. Real-time visibility means a quicker response to problems.
What are Tier 1 tier 2 Tier 3 companies?
Tier 1 Suppliers are direct suppliers. Tier 2 suppliers are suppliers or subcontractors for your Tier 1 suppliers. Tier 3 suppliers work for your Tier 2 suppliers, often in raw materials. These tiers can extend beyond three. Quality control becomes harder the further a supplier is from your organization. Ethical, legal, and cybersecurity issues can arise with distant suppliers. Social responsibility matters in supplier choice. Managing these suppliers has never been easier with supply chain management software like Avetta, offering peace of mind.
What is a second tier company?
Tier 2 companies are suppliers with limits on what they can produce, usually smaller and with less technical advantages than Tier 1 companies. They are no less vital to the supply chain. Every company must comply with quality and safety standards. Tier 2 companies supply products needed by Tier 1 companies, starting production for OEM’s final product. Tier 2 must ensure rigorous compliance because anything not right cannot proceed to Tier 1. Typically, Tier 1 companies have the most advanced processes and are the last step before the OEM, eliminating the middleman.
What is Tier 1 tier 2 and Tier 3?
Tier 1 partners are direct business conductors. Tier 2 is where Tier 1 gets materials. Tier 3, further removed, typically deals with raw materials. Breaking suppliers down by tiers clarifies product composition. Knowing your suppliers aids in building a resilient business and advances sustainability and social responsibility efforts. Understanding your supply chain is crucial for sustainability initiatives.
What is a Tier 1 or Tier 2 company?
Tier 1 Suppliers are direct product suppliers. Tier 2 suppliers work for Tier 1 suppliers. Tier 3 suppliers work for Tier 2 suppliers, extending beyond three tiers as needed. Suppliers are critical for quality control, ethics, legal compliance, social responsibility, and cybersecurity, impacting your operations directly or indirectly.