Provider Damnation 67: Tier 2

Suppliers. You can’t always deal with them, but you cannot survive without them. The same goes for your Tier 1 suppliers. They can’t always deal with their suppliers, but they cannot survive without them. Your suppliers don’t have a magic replicator that your products just materialize out of. They have to manufacture these products from components and raw materials that come from their suppliers. And their suppliers are their problem, right? Wrong.

If Tier 2 Suppliers are late with shipments to your Tier 1 suppliers, you don’t get your product on time.

And, most importantly, while you might get some insight from your tier 1 supplier that a shipment they were expecting is late (and your shipment is going to be late) if you have a great, and very well managed, supplier relationship, you’re never going to get insight from a tier 2 supplier that a shipment is (going to be) late (because there was a delay in their raw material shipment or a production line broke down).

If your Tier 2 Suppliers ship sub-standard materials, your Tier 1 supplier ships sub-standard products.

And there’s no guarantee that your tier 1 suppliers are going to notice that the grade 5 bolts for the transport vehicles were only grade 4, that the dysprosium foil supposed to be 99.99% pure is only 99%, or that the milk powder isn’t tainted by melamine powder to bulk up the weight.

If your Tier 2 Suppliers use forced labour, you get brought up on criminal charges under the emerging anti-trafficking acts and modern slavery acts (California, UK, etc.)

Don’t think that just because you visited the primary factory locations of your supplier and your supplier’s supplier and did an audit that all is clear. Your supplier’s supplier might have five different locations, and while the main location is clean, safe, not overcrowded, and complete with paperwork on all workers demonstrating minimum age and fair wage, the additional locations might be dirty, full of safety hazards, over crowded, and use hordes of undocumented workers, including underage, underpaid, and even forced workers brought in by the local “contractor” to make sure the line runs 24/7 to get those orders out and more currency in. But your supplier’s supplier, operating in a relatively lawless zone compared to the zone your headquarters is in, does this with impunity as it knows that, with the right bribe here and there, the most it will get is a slap on the wrist for its transgressions while your officers could be facing criminal charges.

Damnation exists throughout the supply chain, not just with the immediate supplier and the immediate customer.

Damnation, you left a happy job
Damnation, and now your head throbs
Damnation, now you’re in too deep
It’s a Procurement Damnation
and it makes you wanna weep