Supply Chains: What Does It Mean to Be a Tier One Supplier and a Tier Two Supplier?

supply chains

Did you know that the average car is made of 300 pounds of plastic? That’s approximately 8% of a vehicle’s weight.

It turns out that plastics are all around us, including on our roads and in our cars. Thanks to plastic injection molding, vehicles are now safer and more efficient than ever.

But where do these plastics come from?

Prior to final assembly, these plastics come from automotive suppliers that are classified as either a tier-one suppliers or a tier-two suppliers. But what does each tier mean, and how do they fit into supply chains?

Here’s what you need to know.

The Tiers of Supply Chains

First, let’s talk briefly about the supply chain, and how it works. Understanding the supply chain and who your suppliers are is essential to understanding how to build a more sustainable business.

The automotive industry supply chain is full of different types of suppliers. This includes OEM, tier 1, tier 2, and tier 3 suppliers.

OEM stands for an original equipment manufacturer. However, the name is a bit misleading. While OEMs make some of their own equipment, their chief responsibilities are to handle the scope, design, and branding of a product.

OEMs are the companies whose brand and name end up in the final product. In the auto industry, Ford and BMW are some examples of OEMs.

Next, let’s talk about tier 3 suppliers. A tier 3 supplier is a supplier who hands raw or close-to-raw materials.

These materials are necessary for tier 1 and tier 3 supply companies. Metals and plastics are some examples of materials a tier 3 supplier may handle.

That leaves us with the other two: tier 1 and tier 2.

What Is a Tier One Supplier

A tier 1 supplier gets the product close to its final state prior to delivering it to an OEM. Tier 1 suppliers are known for their expertise in specific industries, such as aerospace or the automotive industry.

Tier 1 suppliers usually have larger operations than other tiers. They work closely with OEMs and often have long-term contracts with them.

What Is a Tier Two Supplier

A tier 2 supplier provides materials to a tier 1 supplier. They are usually smaller businesses than a tier 1 supplier. Still, there a crucial part of the supply chain, since they help kickstart the process and provide the necessary components to tier 1 suppliers.

Let Us Be Your Tier One and Tier Two Supplier

No project is too big or too small for Nova. Our team is essential to supply chains because we act as both a tier 1 supplier to OEMs and a tier 2 supplier to other companies that work with OEMs.

Our 100,000-square-foot plastic injection molding facility is located in Michigan. We’re capable of supporting both the automotive industry and other industries that require our plastic molding expertise. At every step of the process, we work with our customers to ensure customer satisfaction.

Ready to speak with us about your project? Send us a message and we’ll be in touch.

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