The above graphics shows on Tier 0 of the supply chain the End-Product Manufacturer in charge to produce the End-Product which consists (in this simple example) of a number of Products, i.e. Systems, Components and Parts, which are procured from Tier 1 suppliers (red arrows).*

Let's now look at the Tier 1 (T1) Supplier T1-S-n, who delivers a System to the End-Product Manufacturer (black arrows referring to the same Product). This System is composed of Components and Parts which are procured from T2 suppliers. Our model assumes, that a Program at Supplier T1-S-n is again best suited to provide the governance framework for the design, development, manufacture and delivery of this System, while Projects would be set up to govern the incoming Components and Parts.

The same logic applies to lower level Tier suppliers down to that Tier level, where a supplier delivers a Part; in the above example, this is Supplier T3-P-n on Tier 3. The Part may be produced in house, in which case material needs to be procured from a Tier 4 supplier (not shown in the above graphics). Also, the production of this Part might be governed by a Supplier-internal Project. As in the simple example used here there is only one Part governed by one Project, the latter automatically receives the status of a Program.

But also if the Supplier delivers to its Tier 2 client different types of Parts governed by more than one Project, it can be reasonably assumed that a Program provides the right governance framework for the design, development, manufacture and delivery of the Parts.