What is the relationship between a tier one supplier and a tier two supplier?

The relationship between a tier one supplier and a tier two supplier is characterized by a hierarchical supply chain structure. A tier two supplier provides goods or components to tier one suppliers, who then integrate these inputs into their products or services. Tier one suppliers typically handle the direct supply of finished goods or major components to the end customer or the next level in the supply chain.

In this context, tier two suppliers play a crucial role by ensuring that tier one suppliers have the necessary materials and components to fulfill their production needs. This tiered arrangement allows for specialization, where tier two suppliers often focus on specific parts or materials, while tier one suppliers handle assembly, packaging, and distribution.

Understanding this relationship is vital for effective supply chain management, as it emphasizes the interdependence and collaboration within the supply network, ultimately impacting production efficiency and delivery timelines.