Among the most important capabilities are the capability to innovate and design a product; long experience in the industry; large numbers of employees with accreditation in the industry; an existing certified supply net; and experience in managing the supply net to reduce costs and improve performance.
Tier one companies develop close working and business relationships with OEMs. Both organizations recognize the value of collaboration to improve quality, eliminate waste, cut costs and reduce lead times. To improve collaboration, tier one companies use data networks to exchange supply and demand information with OEMs and other members of the supply net so that all parties can synchronize production and logistics. Tier one companies and OEMs also develop joint strategies for improving supply net performance.
In industries such as automotive, tier one companies take responsibility for functions originally carried out by OEMs. Tier one automotive suppliers take responsibility for design concept and manufacturing of modules such as interior lighting systems, fuel delivery and braking systems. OEMs focus on overall design and production of engine and drive train, leaving other components and accessory development to tier one companies.