Supplier sub types allows you to drilldown your Supplier Types further – E.g. Type Meat & Poultry > Sub Type = Chicken. So, the Sub type is Chicken. Further categorising & classifying your supplier list. 

Step 1: Go to Supplier Manger, then select Admin, General Admin & Optional fields on the left

Step 2: Turn on if you want it to be active

Step 3: Select menu key

Step 4: Select Add New Categories. Then add the Category Name & select the Parent Category that it belongs too (that you setup in Company Supplier Types)

Step 5: Once done select Add/Update Categories. Repeat steps to add more categories

Step 6: Your categories will end up looking like this. At any stage if you need to edit follow the steps above. 

Step 7: Once done there select Save Settings