SUPPLY CHAIN SEMANTICS: SUPPLIER VS. VENDOR

By Mike Gaffney, COO

Supply Chain Semantics: Supplier vs. Vendor

  • December 13, 2019

Supply Chain Semantics: Supplier vs. Vendor

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In the supply chain, is there a difference between the terms ‘vendor’ and ‘supplier’?

Both are commonly used terms when discussing supply chain roles and duties, and it’s not uncommon to hear them used interchangeably. As to whether there is a difference worth noting (and how that difference is defined), it largely depends on whom you ask.

Both suppliers and vendors supply goods and services to a company, but there are minute details that make each one a stand-alone term. Let’s clarify.

Supplier vs. Vendor: A Brief Breakdown

Some sources define a supplier as a business or person that make goods available to another business or service. Suppliers are often referred to as the first link in a supply chain, existing strictly in a B2B relationship.

By contrast, a vendor is a business or person who purchases products from a company, then sells them to someone else. They’re often considered the last link in the supply chain and can participate in B2B or B2C relationships.

Another notable difference is that vendors are typically in the business of providing items that can be inventoried, while suppliers deal more in raw materials that will be turned into something else. In this comparison, vendor relationships are usually focused on price comparisons, while supplier relationships are more attuned with how the supplier influences the quality of the product.

Suppliers and Vendors

Illustrating the Vendor vs. Supplier Relationships

Let’s put these definitions into perspective with some examples.

You own a restaurant and serve several types of soda. You order your soda from a vendor instead of a supplier because mixing, canning or bottling, and storing your own soda is too much of an expense and hassle to justify doing it all yourself. You probably have a contract with a particular vendor to supply your restaurant with all its soda.

Now, let’s say you’re a health-focused restaurant that specializes in high-quality, organic, made-from-scratch meals. You’ve partnered with several local farms to supply you with ingredients that you use in your kitchen. These farms would be considered suppliers, as your company is directly connected to the integrity of their products. The supplier is considered a partner in the business, helping to enhance your company image while providing a mutually beneficial relationship.

supplier vs vendor

Specification Data Management: A Common Link with Vendors and Suppliers

Regardless of whether you use vendors or suppliers (or both), companies need an easy way to track their relationships with each, along with what they’re buying and how much it costs.

In either case, Specification Data Management software can provide a direct link to your entire suite of strategic partners. Managing your relationship data at the spec level can help you track materials and identify opportunities to save money and improve efficiency across the supply chain.

As is the case with many industries, better data management is the future of the supply chain. Learn more about how it can help you improve the way you work.

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