As global supply chains grow increasingly complex, traditional management approaches — heavily reliant on metrics like cost and annual spend — can no longer fully ensure operational continuity. The COVID-19 pandemic, combined with rapid technological advances, exposed significant vulnerabilities in these one-dimensional strategies. This shift has led to multi-tier criticality management (MTCM), a methodology developed to assess suppliers based on the criticality of their materials to end-to-end operations, enabling proactive risk management and sustainable supply chain resilience.
Conventional metrics, like cost and annual spend, have historically guided supplier performance evaluations, but they miss the true operational risks posed by potential disruptions. Low-cost materials, often classified as “non-critical,” can bring production to a halt if unavailable. MTCM identifies and prioritizes these essential, low-cost items by highlighting their operational and strategic impact, extending beyond mere dollar value.
According to McKinsey, an estimated 80% of supply chain disruptions stem from challenges within tier-two suppliers or further downstream. A Resilinc report reveals that companies using multi-tier supplier evaluations see up to 20% fewer disruptions, and a 25% improvement in operational efficiency. Such findings underscore the urgent need for a holistic approach such as MTCM to maintain stability across supply chain tiers.
