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Vendor vs Supplier: which should you use?

Some individuals may consider that “vendor” and “supplier” can be used interchangeably but there is a difference. In this article, we will look at the difference between a vendor and a supplier and the impact this can have on your business. So, which one should you be using?

The vendor

The vendor is someone who sells finished goods that they have purchased from a manufacturer or wholesaler to customers or businesses. They have relationships with consumers and with other businesses. They don’t tend to sell goods in bulk. They are the last step in supply chain management. The vendor has a wide variety of products to purchase from.

The supplier

They are the first step in supply chain management. The suppliers normally only have B2B relationships and sell raw materials and machinery to manufacturers who convert these raw materials into other products. They tend to also sell specific types of goods or raw materials in bulk. Their level of risk is high because most of the goods sold are bought in bulk.

But how do you choose which one to use?

Well, it depends on your needs. You will use a vendor for the following reasons:

  • to order a wide variety of finished goods.
  • to purchase locally sourced goods.
  • You want to stock your business with a small quantity of an item.
  • You want to use the product.

You will use a supplier for the following reasons:

  • To order an item in bulk
  • To get an item at discount because of the large order you placed.
  • To get supplies to use in a manufacturing process
  • To buy a large number of items

When you know the type of product you want to purchase and who you intend to sell it to then you can go and look for a vendor or supplier who can help you with your needs.

Now that you know which to use how do you deal with them?

With vendors, you will negotiate the price point for the product and you will compare the price with other vendors who sell the same or similar products.

With suppliers, the relationship is a little different because they usually supply a business with products which help them to produce the goods they sell. Therefore it is important to look at suppliers as partners in your business. If you can’t work well with them then your whole enterprise might be in jeopardy. Look for more than one supplier for the goods you need so that if something should happen to your first choice supplier you will have someone to fall back on if the need arises.

With this information, we hope that you can make a more informed choice when it comes to buying products or raw materials for your business.

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