A robust logistics and supply chain is significant for your manufacturing process to prevent shortages of supplies and streamline procurement. Every business needs to understand where the materials are coming from and strive to improve collaboration with those sources. The major stakeholders in the supply chain process include wholesalers, distributors, suppliers, vendors, and retailers with each player having a specific role in the process.
In this blog, we explain the definitions of vendor vs. supplier vs. distributor and find out how best to improve collaboration for better supply chain management.
Who is a supplier?
A supplier in a supply chain process refers to an entity that provides goods and services to customers from the manufacturer directly. A manufacturer can also be a supplier. Say for example, a manufacturer of raw materials like cotton or jute is a supplier to a firm that makes fabrics who then sell it to a final customer. A supplier is therefore a business-to-business (B2B) entity that acts as an intermediary to help you in obtaining the product from the manufacturer and supplying it to other businesses.
Who is a vendor?
A vendor is a business-to-consumer (B2C) entity and usually sells goods and services to the final customer. They sell products from manufacturers to suppliers. A company can be a vendor to other businesses because they provide software and services but do not supply any physical goods. An example of a vendor would be a retail store that sells different products sourced from different businesses to their customers.
Who is a distributor?
A distributor is someone who buys products from a supplier, store them in a warehouse, and then sells them to vendors or end consumers. Depending on what they sell, distributors can be B2B or B2C. Distributors help to simplify the purchasing process for large companies and keep stock of certain products. An example of distributor would be an online vendor who distributes orders from their warehouse.
In the next section let us understand the core differences between supplier, vendor and distributor.
Vendor vs. supplier
In manufacturing, a supplier sells to other businesses. They either supply directly from the manufacturer or are the manufacturer themselves. Vendors on the other hand, sell physical products to end customers and these products are sourced from suppliers. Secondly, suppliers work with physical products and vendors lean more towards software and/or services.
In many cases, the difference between vendor and supplier gets blurred. Most manufacturing companies refer to any person they sign a contract with as a supplier or a vendor. Again, same is the case of a vendor who produces their own goods. An entity who sells a product in the market is a vendor but when the same person owns a production centre and provide bulk items to other businesses, that makes him a supplier.
Vendor vs. distributor
While vendors and distributors both sell raw materials or goods to the final consumer, the difference lies in the fact that distributors store products in a warehouse and ship to customers. It is possible for both vendors and distributors to have direct relationships with suppliers.
Distributers are the primary suppliers to a business whose products are sold in a physical store. On the other hand, vendors typically sell their products through brick-and-mortar stores.
Distributor vs. supplier
In the case of distributer vs supplier, the distributors sell to final customer, and suppliers sell to other businesses that will further sell to the end consumer. The supplier and distributor relationship lies in that both distributors and suppliers provide physical products to a company. But the difference is that distributors do not manufacture the product but only stock it for the manufacturers. Moreover, distributors are like the mediator between the supplier and the manufacturer. On the contrary, a supplier can work directly with a manufacturer.
This is how a typical supply chain works:
Supplier –> Manufacturer –> Distributor –> Vendor –> Customer
To sum up: How to collaborate with your vendor, supplier and distributor?
Managing supply chain can be a tedious and expensive process. If you understand the roles played by the vendor, supplier and the distributor in the supply chain ecosystem, you can work towards better collaboration and work out better deals. When you start a new business, make it a point to identify your vendor, supplier and distributor with care as they will enable you to handle procurement without any delay . Identify one that has the capacity to fulfill all your requirements. Once your logistics challenges are resolved, it becomes easier to grow your business.
In case you are looking at service providers to handle your logistics challenges, you can easily check out nexLogistics – a service provided by Tata nexarc, that enables emerging businesses to find reliable partners at affordable prices. Some of the benefits that nexLogistics offer include lowest prices, comparative rates from partners, wide pin code coverage and the availability of the complete logistics cycle on one dashboard.