For a company, the supply chain is no easy matter to map, considering how many suppliers may be involved in various stages of production for one single product. We often hear our stakeholders talk about their suppliers based on Tier numbers, from “Tier 1” to “Tier 2-4” to “Beyond Tier 1” – i.e. the supply chain tiers. 

Supply Chain Tiers: What Are Tier 1, Tier 2 and Tier 3 Suppliers?

How do supply chain tiers mean, and how do you define them? Let’s take the electronics industry as an example. If you’re Apple, your Tier 1 suppliers might be, among others, Qualcomm, supplying chips that run phones and laptops and Flex, which might be manufacturing enclosures and assembling final products. If you’re Qualcomm, your Tier 1 supplier might be 3M, supplying solder and adhesives to keep things in place; for Flex, you might have material vendors like Corning providing the plastics, glass and metal for enclosures. These, in turn, would be Apple’s Tier 2 suppliers. In this scenario, these tiered relationships go on for a very, very, very long time because, while small, phones and laptops can be massively complex. The point is that when someone says “Tier 1”, they could be referring to what is considered a Tier 2 supplier by another organization in the supply chain.

Whenever someone says “Tier #”, our first question is how their organization defines Tier 1, 2, and 3. Some define it based on a sequence of production activities and proximity to an end product, like above; others suggest Tiers also relate to a supplier’s capabilities (e.g. Tier 1 may play a role in directly managing aspects of a project for a buyer). Another way to identify Tier 1 could be based on annual volume or spending, as Tier 1 suppliers are often cost centers for buyers.

OS Hub Tiers for Global Supply Chains

One frequently asked question we get at OS Hub is why don’t we have a filter for Supply Chain Tier? In particular, stakeholders are really interested in better understanding “beyond Tier 1” – the suppliers and manufacturers that don’t have direct relationships with. 

In part, the lack of a Tier filter is because Tier 1, 2 and 3 can mean different things to different people, depending on their organization and where they are in a supply chain. That said, we’re getting more information about what stakeholders mean by “Tier #” all the time. One way is through the list of names that contributors use to label their data. See some examples of the ways that contributors label their uploads here. Another way we gain insight is through data points like sector, product type, facility type and processing type. These optional details can provide critical signals about what defines a Tier. 

Our strategy is that by expanding how contributors can label their data while adding consistent taxonomies which relate facility type and processing types to position within a supply chain, we will better address the desire that stakeholders have to understand their “beyond Tier 1” production locations. 

Find out more: (1) How to Share your data, (2) Search and download our free and open supply chain dataset, (3) Read more stories of impact. If you prefer video, check out our YouTube channel.

Have other ideas about using crowdsourced data to map supply chains? We’d love to hear them. Email us at data@opensupplyhub.org.