If your company manufactures physical products, it is important to know where all the parts and materials come from.  A practical approach is by dividing your supply chain into levels, called “tiers.”  These tiers provide valuable insights for you to see how each part of your product is processed and integrated into the final product.  This knowledge can enhance your business reliability, transparency, and resilience.

Even if your company does not manufacture products, it’s still beneficial to evaluate your suppliers this way.  For example, the paper used in your printers, the light bulbs in your office, or the water bottles stocked in the pantry.  All these things are supplied by other companies.  By conducting a thorough assessment, you make sure your business is collaborating with the right partners.

Why This Is Important for Sustainability

Consumers today place significant importance about where products come from and how companies operate.  They want companies to have integrity and accountability.  If you understand your supply chain well, you can make better decisions that help the environment and uphold fair treatment of workers.

If you do not pay attention to your suppliers, you might unknowingly contribute bad practices like pollution or poor working conditions.  Studying your supply chain closely helps you identify and address these problems.  When you communicate these efforts with your customers, it helps build trust.

Understanding your supply chain is also important if you want to measure your company’s impact on the environment, such as how much greenhouse gas you produce.  It is impossible to measure and manage your carbon footprint without having knowledge about where your materials come from.

What Are Supply Chain Tiers?

Think of supply chain “tiers” as levels, based on how close each supplier is to your finished product.

• Tier 1 Suppliers
  These are the companies you work with directly.  If you sell furniture, the workshop that builds your chairs and tables is a tier 1 supplier.
• Tier 2 Suppliers
  These companies supply materials or parts to your tier 1 suppliers.  In the furniture example, this would be the lumber mill that processes the wood used to make the chairs and tables.
• Tier 3 Suppliers
  These are companies that provide raw materials. In the furniture example, the forest operation that harvests the timber for the lumber mill is a tier 3 supplier. They are the first step in the process.

What to Do Next: Map Your Supply Chain

Once you understand the different tiers, the next step is to create a supply chain map.  Start by documenting all the suppliers, factories, and shipping partners you currently use.  Then engage them to learn more about how they source their materials, how they treat their workers, and how they protect the environment.

This process takes time, but it is worth the effort.  With a full view of your supply chain, you can find ways to lower your carbon emissions, improve labour conditions, and make better purchasing decisions.

Focus on the areas where you can make the biggest changes.  This may involve using more eco-friendly materials or working with suppliers who treat workers better.  Every small improvement helps build a more responsible business.

Final Thoughts

Every company’s supply chain is unique.  Some are simple, others are very complex.  But all businesses benefit from knowing how their products are made and who is involved.

Whether you sell a product or just buy supplies for your company, taking a closer look at your suppliers helps you run a resilient and more responsible business.  It takes time and effort, but starting now will help you in the future and show your customers that you committed to ethical practices.