Determining Tier 1 or Tier 2 Status
BNY Mellon’s Supply Chain Responsibility Program relies on a tiered approach to make sure diverse suppliers have the maximum amount of opportunities by participating in the program. The “Tier” is relative to the purchaser.
BNY Mellon views a Tier 1 Supplier as a supplier that invoices BNY Mellon for goods and services rendered directly. A Tier 2 supplier is a supplier that invoices the Tier 1 supplier for goods and services rendered.
BNY Mellon encourages its non-diverse Tier 1 suppliers to subcontract or work with diverse suppliers. The spend that the Tier 1 supplier has with diverse suppliers in that regard is considered as Tier 2 diverse spend.
BNYM’s Tier 2 Definition
The concepts of “Tier 1” and “Tier 2” are generally known in the supplier diversity field, and many companies track and report on Tier 2 diverse spend, including direct and indirect spend. However, each company might define direct and indirect Tier 2 diverse spend differently. At BNY Mellon, we consider direct spend and indirect spend as:
This is the amount that BNY Mellon spends with a Tier 2 diverse supplier through BNY Mellon’s prime supplier for services/products that directly supports BNY Mellon’s business needs. These purchases must be able to be directly traced back to a specific agreement between BNY Mellon and a third party.
This is the amount that BNY Mellon’s prime suppliers spend with diverse suppliers in support of the prime supplier’s overall operations and business. This spend is not related to a specific BNY Mellon business need, but indirectly contributes to the business that the prime supplier has with BNY Mellon. A company can have both a direct and indirect diversity spend.