3 Tiers: Internal, Contract Manufacturers, and Exclusive Brokers
Some companies set up three categories of companies with which you can buy and sell direct materials: Company Internal (Tier 1), Contract Manufacturers and other Tier 2 companies, and Exclusive Brokers and other Tier 3 companies.
- Company Internal (Tier 1) companies are internal groups or entities within your company that buy and sell materials from each other. They are not offered a discount from the standard cost.
- Contract Manufacturers and other Tier 2 companies are those companies to which your company offers a small discount from the standard cost when selling direct materials.
- Exclusive Brokers and other Tier 3 companies are offered a greater discount than Tier 2 companies.
