What is a Multi-Tier Supply Chain? (and Why is Visibility So Important?)

While the term supply chain refers to the link that connects facilities, companies, supply and demand, and providers, the term multi-tier supply chain builds on this concept to include more than one level of manufacturers to produce a customer product or service. There are numerous relationships happening at once between buyers and suppliers within the single supply chain.

Sometimes this process involves hundreds of different companies that play a vital role in bringing a product to life.

The Importance of Visibility

Technology and the cloud are helping to make multi-tier supply chain visibility a reality. Communication is vital to improving coordination of activities. For example, if there is a shortage of components, others involved need to know as the effects are widespread. More data needs to be shared within each tier, too. This way, every level can adjust to market demand accordingly.

Connectivity allows for the necessary collaboration and communication between groups, heightening visibility to include forecasts, demand, inventory, and shipments. It speeds up the flow of information to help reduce the entire planning cycle, assists in more effective measurement, and reduces overall supply chain risk.

The benefits can be seen across the entire product life cycle, allowing for seamless product launches. This communication between tiers allows brand owners to receive vital information quickly, which results in reduced risk of component shortages and shorter lead times.

The Growth of Sustainability

Not only is visibility crucial to the effectiveness of multi-tier supply chains, it is a major factor in society’s growing focus on sustainability. Today’s multi-tier supply chains operate internationally. They are complex and sometimes challenging. According to an article published in The International Journal of Production Economics, entitled “Unlocking effective multi-tier supply chain management for sustainability through quantitative modeling: Lessons learned and discoveries to be made,” we must now add to this complexity that internal and external stakeholders, regulators, consumers and other organizations also want firms to take responsibility for unsustainable practices and misconduct in their supply chains. To this point, visibility is more important than ever in maintaining sustainable integrity.