N-tier suppliers are quickly emerging as one of the highest-risk areas in global supply chains, according to findings from Sphera’s 2025 Supply Chain Risk Report,
The report, which reviews data from 2024, found that force majeure declarations rose by 61%, hazardous materials alerts increased 54%, and quality issues jumped 22% — all within a single year.
A critical insight is emerging: Most supply chain disruptions do not originate from Tier 1 suppliers. Instead, they stem from N-tier suppliers, those operating deeper within the supply chain. Research shows that approximately 85% of significant supply chain incidents can be traced back to Tier 2-4 suppliers. However, limited visibility into these tiers often prevents companies from identifying risks until disruption has already occurred.
What’s driving this lack of visibility? And how can organizations address the accountability and transparency challenges associated with Tier N suppliers?
This article explores:
- Key sources of hidden risk beyond Tier 1
- How siloed systems contribute to operational blind spots
- Why improved data quality, not just new tools, is essential for achieving true supply chain transparency
Most supplier risk lives beyond Tier 1
Supply chains are facing unprecedented levels of risk and fragmentation. With a growing wave of ESG regulations on the horizon, relying solely on Tier 1 oversight is no longer enough to manage exposure or ensure resilience.
Without structured, consistent monitoring for upstream risks across Tier 2, 3, and beyond (such as ESG violations, macroeconomic volatility and geopolitical disruptions) organizations risk compliance issues, unplanned cost spikes and missed sustainability targets.
Adding to those risks is the assumption that suppliers will voluntarily share accurate data, especially those further down the supply chain. But lower-tier suppliers often lack the infrastructure, incentives or oversight to report complete and timely information. Further, many may not fully understand reporting requirements or may intentionally downplay issues like labor violations, emissions or sourcing dependencies to maintain business.
This issue is systemic: Over half of procurement and supply chain leaders in Sphera’s survey said they struggle to get reliable data from N-tier suppliers. Yet many businesses aren’t treating it with the urgency it deserves; 39% admitted they assess these suppliers only if a disruption has already occurred.
As ESG rules tighten and product recalls become more common, companies can’t afford to stop at Tier 1. Leading organizations are starting to work more closely with Tier 2 and Tier 3 suppliers to get better visibility and reduce risk. The report notes a shift. More than 60% of respondents said that improving N-tier transparency is now a high or critical-level priority.
Siloed legacy tools are one of the biggest barriers to supply chain visibility
Many CSCOs still rely on legacy systems like ERP exports and spreadsheets and disparate, manual forms to track supplier performance and manage disruptions. But siloed tools don’t share information in real time and restrict leaders’ ability to track and interpret trends. For example, only 16% of leaders surveyed said they had access to automated alerts that flag N-tier supplier risk events in real time. That means key events like disruptions or force majeure declarations can catch them off guard, leading to serious cost and continuity issues.
How can leaders anticipate disruptions like these? Centralized and integrated data can power predictive insights in real-time. Teams that invest in early detection catch signs of trouble like repeated revenue downgrades, supplier leadership turnover, or sudden M&A activity before they escalate into serious disruptions. These indicators often appear weeks or months before more serious issues emerge, giving companies the chance to act before suppliers reach a breaking point.
Visibility fails without data integrity
As companies pour resources into N-tier risk management, many overlook the ways that incomplete, outdated or unverified data limit the value of even the best tools. Frequently, suppliers (especially those beyond Tier 1) offer outdated, inconsistent, or self-reported data without verification. Organizations must verify or reconcile these disclosures, often with third-party sources, or risk blind spots in disguise.
For example, in 2024, a global electronics manufacturer saw a 15% spike in defective components, triggering production delays and a recall that cost an estimated $12 million. The root cause? A key supplier relocated its operations without notifying the company. This has become an all-too-familiar scenario for many businesses. Over 47% of leaders surveyed reported experiencing disruptions in 2024 due to issues originating with N-tier suppliers.
Investments in visibility only go as far as the integrity of the data behind them. Without addressing the core issue of data quality, visibility tools can only provide a partial view.
Spot blind spots before they cost you
As supplier networks become more complex and risk exposure deepens beyond Tier 1, CSCOs should call for unified systems fed by quality data. Addressing gaps is the first step toward building a more resilient supply chain.
With the right technology, data, and expertise, companies can move from playing catch-up to taking control. Sphera’s Supply Chain Transparency solution equips teams with the tools they need to act early and confidently, including:
- End-to-end supply chain visibility
- Supplier sustainability and risk performance monitoring
- Forecasts and mitigation guidance
- Multi-tier mapping and premium data sources
- Expert research and support teams
In a world where disruptions are constant and regulations are only growing more complex, CSCOs who invest in integrated, verified insights will be better positioned to adapt, respond and lead.
