The majority of original equipment manufacturers (OEMs) entrust the production of component parts to a considerable number of suppliers. Producers of major sub-assemblies (first-tier suppliers) may subcontract specialist tasks to other (second-tier) suppliers who, in turn, may continue the subcontracting chain as far as the raw material supplier. This is the supply-chain . Traditionally, there has been little contact between the OEM and any member of the supply-chain except the first-tier suppliers. However, mounting competitive pressures, and the need to move to Just in Time manufacturing, has changed this approach.
If the needs and aspirations of the whole supply-chain are considered, opportunities for mutual business improvement may be found. Successful supply-chains are characterised by reductions in the overall number of suppliers and treatment of those remaining as an extension of the OEM's facilities (e.g. by assistance with process development, equipment acquisition, etc). This has been shown to encourage greater commitment by, and assistance from, the suppliers, resulting in improvements to component quality, reduction in manufacturing costs and more responsive deliveries.