Supplier tiering is a business practice that categorizes suppliers based on their performance and potential value. The technique is used to segment suppliers into groups according to criteria such as contract value, quality, delivery performance, financial responsibility, customer service, and strategic importance. This approach helps an organization create meaningful relationships with its strategic suppliers while working with lower-tier suppliers to drive down costs. Supplier tiering helps organizations become more efficient in managing the procurement process and enables them to focus resources on the best-value partners.