Tiering suppliers is a form of supply base management in which suppliers are organised such that only first tier suppliers deal directly with the buying organisation. Second tier suppliers will participate in the same supply chain, but will supply first tier suppliers who will assemble or integrate before supplying the buying organisation. The practice originated in the automotive industry and allowed car assemblers to reduce their first tier supply base to below 1000 suppliers. The practice allows the development of differentiated supply relationships with a smaller community of suppliers. Management contracting is a similar practice in the building and construction sector.
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