Many firms are moving towards closer functional relationships with their suppliers by nominating preferred suppliers with whom they develop very close relationships. Such suppliers are increasingly being given greater responsibility for the quality of their outputs and, indeed, are playing a more direct role in product design. The result, in many cases, is the development of a system of tiered suppliers. In tiered production, the buying company deals primarily with the top-tier suppliers, while lower-tier suppliers are managed by those above them in the pyramid… A tiered production system reduces the need for a single company to manage the entire supply chain.