Lapasar
Sourcing & Suppliers

Tier 2 Supplier

A tier 2 supplier supplies to the buyer's tier 1 suppliers rather than to the buyer directly.

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Tier 2 suppliers sit one level further up the supply chain, providing components, materials or services to the tier 1 suppliers that a buyer contracts with. The buyer usually has no direct commercial relationship with them, yet their reliability, quality and ethics can materially affect the goods the buyer ultimately receives. They are part of the extended supply base.

Because problems at tier 2 can disrupt tier 1 and therefore the buyer, mature procurement functions map key tier 2 suppliers for critical categories and may set expectations that flow down through tier 1 contracts and supplier codes of conduct. Concentration — where several tier 1 suppliers depend on the same tier 2 source — is a common hidden risk.

Frequently asked questions

What is a tier 2 supplier?
A tier 2 supplier supplies goods, components or services to a buyer's tier 1 suppliers rather than to the buyer directly, sitting one level further up the supply chain.
Why do buyers care about tier 2 suppliers?
Disruption, quality issues or unethical practices at tier 2 can flow through tier 1 and affect the buyer, so understanding and setting expectations for key tier 2 suppliers helps manage supply risk.

Go deeper

Supplier risk management guide

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Operating model · diagram

  1. 01

    AI-first software

    AI-first procurement software for long-tail spend

  2. 02

    Live marketplace

    A live B2B marketplace

  3. 03

    Human services

    Human sourcing and support

  4. 04

    Optional add-on

    Fulfilment support for merchants